Real Estate Investing Basics

The Practical, 3-Step Way to Get Started in Real Estate With No Money

Expertise: Real Estate Investing Basics, Landlording & Rental Properties, Real Estate News & Commentary, Mortgages & Creative Financing, Real Estate Wholesaling, Personal Development, Flipping Houses, Business Management, Real Estate Deal Analysis & Advice
189 Articles Written
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One of my listeners recently wrote to me and asked a question I think a lot of aspiring investors want to know. How do you get started in real estate with no money? If you Google something along these lines, you'll probably find a list of articles, websites and books about how to "invest" with no money down. Yes, there are many different techniques for acquiring properties with no money down, but I am of the opinion that there are better ways to get into real estate with no money than immediately jumping into owning property.

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The very first real estate course I bought (at a garage sale) in my early twenties was the original Carlton Sheets  “No Money Down” home study course. Knowing absolutely nothing about real estate at the time, it was actually very instructive in helping me develop an understanding of basic real estate concepts. However, much of the course had to do with finding and buying properties with little or no money down. While there were some great strategies, I intuitively knew that it wasn’t a good idea to go out there and buy a bunch of properties when I literally didn’t have any extra money in the bank. Any investor will tell you that there should always be some level of cash reserves to support owning properties because there will inevitably be unforeseen costs and expenses associated with owning property.

Related: The Book on Investing in Real Estate with No (and Low) Money Down

As such, when somebody asks me how to get started in real estate when they have no extra money in the bank, I tend to steer them away from trying to buy property and instead direct them to gain experience as a birddog or wholesaler first and work up from there. To help those who want to know exactly what steps I would take if I were starting today with nothing, here is a simple road map that I would use to begin building a real estate business.

The Practical, 3-Step Way to Get Started in Real Estate With No Money

Build a Buyers List

The most valuable asset you will own and develop as a local real estate birddog and/or wholesaler is your buyers list. Having a strong list of buyers who will buy deals from you is your golden ticket for being successful in this business. The beautiful thing about this is that it doesn’t cost money to compile one; it just takes a little effort on your part. While there are plenty of articles on BiggerPockets about how to build a buyers list, here are just a few outlets you can use: Craigslist, Facebook, LinkedIn, ActiveRain, marketing at auctions, local REIAs, newspaper classifieds, other wholesalers, bandit signs, Realtors, tax records, local lenders, etc.

I actually had lunch yesterday with one of the top wholesalers in Atlanta who essentially makes his living off of the buyers list he’s put together over the last several years. He sends out an average of one to two wholesale deals per day and will likely sell 400 houses this year because he put in the time to develop his list.

Find Deals to Market

Most wholesalers find deals by sending out postcards, knocking on doors, putting up signs, networking with agents, etc. But somebody who literally has no money to start with may not have the capacity to do this. As such, when just starting out, it often makes sense to JV with other wholesalers on deals. You will find that there are other active wholesalers in your market who are constantly finding deals. I think a very viable strategy is one in which you align yourself with a few of these wholesalers and help them find buyers for their properties. It depends on what you negotiate with the wholesaler, but you can typically build in a referral fee of a few thousand dollars for finding buyers for their properties.

Again, this is where having a good buyers list comes in handy. That wholesaler may have great resources for finding good deals, but you may have compiled a strong list of buyers who can be utilized to help sell those properties for that wholesaler.

Related: How I Bought an 18-Unit Apartment With No Money Out of Pocket

Graduate to Buying Property

Once you’ve spent a good deal of time looking at properties and selling wholesale deals in your market, you’ll have a much better idea of what’s a good deal and what’s not. Over time, as you begin to get some paychecks under your belt, you’ll be in a better position to begin investing yourself. On top of this, you’ll figure out that you can cherry pick the best deals you come across for your own investment. I personally believe it makes a lot more fiscal sense to have some cash reserves as well as experience before investing in properties yourself.

One of the reasons so many people are drawn to real estate is because of the opportunity to get started with very little capital. While this is the case, I think it’s important to go about it the right way. With a little creativity and diligence, just about anybody with a computer and a little networking ability can begin their real estate investment business.

What do you think: Is it practical (and a good idea) to start out in real estate with no money? What strategy would you use?

Leave your comments below!

Ken Corsini is a seasoned real estate investor and business owner based in Woodstock, Georgia. Ken is best known for his role on HGTV’s hit show “Flip or Flop Atlanta,” and has flipped over 800 hou...
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    Brian Gibbons Investor from Sherman Oaks, CA
    Replied over 5 years ago
    Hi Ken, LOVE those 3 steps for Quick Start in Wholesaling if you are BROKE! Here are 3 steps if you are a BROKE AGENT! 1. Be a Transaction engineer for Expired Listings. 2. Study tools like Sub2, Lease Option Assignments, Wrap around mortgages, Master Lease Options, Master leases, etc. Chances are the expired listing is overpriced and can not afford the traditional costs to sell due to low equity. You make money from the Buyer on Lease to Own, 3%! 3. Exit strategy is Lease to Own with a buyer with strong income but needs time to qualify, and earn 3% in as little as 10 hours. You act as a principal not as a fiduciary agent.
    Ken Corsini Flipper/Rehabber from Woodstock, GA
    Replied over 5 years ago
    Thanks Brian – Great strategies for new agents!
    Oge
    Replied over 5 years ago
    This is absolutely correct. You nailed it. Initially I don’t have an idea of how to kick start my real estate business with no money but this steps will definitely put me on a right start. I have over 2000 connections of LinkedIn and would work on sending out my first email to them on hot deals to buy right now.
    Oge
    Replied over 5 years ago
    Also, running a google ad word Ppc ads has been proven to be another powerful lead generating strategy that can get anyone started on low budget.
    Lily Aguilar from Encino, California
    Replied over 5 years ago
    Thank you guys & gals!
    Andrew Cordle from Alpharetta, Georgia
    Replied over 5 years ago
    Good advice on building a stable foundation before buying a property outright.
    Thomasine Scott from Houston, Texas
    Replied over 5 years ago
    isn’t wholesaling illegal? recently there was a blog post and podcast on bp stating that many states are cracking down on wholesaling and the best thing to do would be to get your real estate license. I’m not trying to get fined or even worse, end up behind bars for doing something illegal so once and for all do i need a real estate license to wholesale? Also I recently read something about purchasing property deeds/tax liens at discounted prices and then reselling them at or around the actual value of the property. Is this like wholesaling but for properties that are in good/better condition? Aside from the fact that you actually have to start out with a small amount of cash.
    Brian Gibbons Investor from Sherman Oaks, CA
    Replied over 5 years ago
    Ken will back me up on this… Research your state Some states do not like assigning paperwork like option to purchase, sale and purchase, etc without a license. In GA they assign all the time, fl and oh is much tougher. Research what it means to “broker contracts” in your state. Start with your REIA president and a good senior real estate broker that can quote your state legal statute on what defines brokering and “acting agent for” And remember if you are licensed you can act as a business principal and not a fidiciary agent, and act in your own self interest. This is a “brokering without a license” issue. Know your state laws. Wholesaling is not illegal.
    Chad Brumley from Edmond, Oklahoma
    Replied over 5 years ago
    Thanks for the blog. When birddogging do you actually contact the owner or do you just find what looks like a good deal and let the wholesaler do the rest?
    Robert Lenfestey Real Estate Investor from Cary, North Carolina
    Replied over 5 years ago
    I have a strategy I’d like to get feedback on. This would pertain to real estate licensees. I think this would be ideal for a young person just starting out with no family and no assets. Essentially it’s house hacking for cash poor agents. 1) Locate 4 plex you could live in, and will cashflow on 3 rented units.. 2) Act as agent and principal 3) Buy it using FHA loan with 3.5% down 4) Use your 3.5% commission as the downpayment 5) Live in 1 unit and rent the other 3 6) Repeat every 12 months.
    Darren Sager Investor from Summit, NJ
    Replied over 5 years ago
    Most people want to jump into the deep end with REI and don’t realize there’s a learning curve. You give some great examples on how to get in, learn, and be ready for when you can execute on your own. Nice article Ken!
    Jay Gee from Keyport, New Jersey
    Replied over 5 years ago
    Awesome read. I just signed up to get my real estate license and am loving all the insight and advice offered by authors like this. I just finished the positivity article, as well. Def recommend that article to any person who has not read it yet. https://www.biggerpockets.com/renewsblog/2015/04/18/turn-social-media-feeds-into-positivity-building-machines/ I’m going home today to add real estate investors in my area to my social networks.
    Dianna Brooks Real Estate Investor from Atlanta, Georgia
    Replied over 5 years ago
    Good read and very honest. Thank you. Practical application and experience wins every time.
    Assaf Furman Wholesaler from Campbell, California
    Replied over 5 years ago
    I spoke with a guy who began his way by working as a property inspector. He says he can estimate repair costs within 10 Minutes and is accurate as much as 10%
    Tomas Chao from Gastonia, North Carolina
    Replied over 4 years ago
    Good read. I enjoyed your post. Some good ideas to start with. Thanks
    Rose
    Replied over 3 years ago
    Great checklist to go through before you start… I enjoyed reading your post!
    Debi Brown Rental Property Investor from Aurora, CO
    Replied about 3 years ago
    Great article, thank you for the insight!