Mortgages & Creative Financing

No Money? No Credit? No Real Estate Experience? Read THIS Before You Do Anything Else.

Expertise: Real Estate Investing Basics, Real Estate News & Commentary, Personal Development, Flipping Houses, Landlording & Rental Properties, Personal Finance
103 Articles Written

Somehow, real estate investing has acquired the perception that it is easy, cheap, and will make you boatloads of money in minutes with little money out of pocket and even less work.

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Boy, I wish.

Our delightful Brandon Turner has written an entire book called The Book on Investing in Real Estate with Low (and No) Money Down!

But even HE has this to say about his book:

“This book is not going to make you a millionaire. It’s not going to give you the step by step path to make $1,000,000. It’s not going to give you a simple method for finding incredible success.
It’s just a book. YOU are going to have to do the work. 
This book is not about easy. It’s not about simple. It’s not about convenient.”

Now don’t get me wrong — it’s a great book. It’s an excellent guide for investing in real estate using other people’s money. But there’s still money involved in investing.

It takes money to make money. This super-cliché also happens to be super-true.

Nobody is going to give you a house. OK, it might happen. Three people won that billion dollar lottery, too — but it wasn’t you, was it?

How do you expect to acquire a property if you have no money? What are you going to do with that property once you have it if you have no money?

Last week, I wrote an article called “The #1 Reason Newbies Go Broke in Real Estate (& How to Avoid It!).” In the article, I told of neighbors with a rental property who didn’t have enough in reserves to cover the water heater they needed to replace. They had not yet recovered from that expense when the furnace went out a few months later. They do not still own that rental property.


Let’s Play Pretend for a Minute

Pretend you obtained a property. But you don’t have any extra money. Let’s say you have a renter in place, but the rent covers your expenses with little to nothing left over after.

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

How would YOU replace the furnace if it went out in the middle of winter? Or if you’re in a warmer location, how would you replace the AC if it went out in the middle of summer?

Maybe you’re rehabbing. How do you pay for the materials and labor?

One hundred percent LTV loans are hard to find, especially if you are just starting out. Brian Burke could probably find one, but that’s because he’s Brian Burke. And he isn’t just starting out — he has a fairly sizable portfolio of completed jobs, something like 600 flips.

If you think 100% LTV loans are hard to find when you're just starting out, imagine how difficult it would be to find someone to loan you 100% of the purchase price, then loan you 100% of the repair costs on top of that!

Look at it from the lender's point of view. You are an unknown entity with no track record. Why would they risk their money, with no control over the situation? You the borrower literally have zero dollars at stake in this scenario. Should something go wrong, you could technically just walk away from the whole thing.

Rehab Problems

Anybody who has ever rehabbed a home will tell you that it’s not like those TV shows. There is ALWAYS something unexpected that pops up to ruin your budget and your timetable.

Sometimes, it throws you off by a few days and a nominal amount of money, but more often, it throws you off by weeks and thousands. This is why you build in 10-20% overruns into your budget and your schedule.

So you have your property. You are about to start your construction and you discover all the pipes have frozen and burst. Your $25,000 rehab just turned into a $50,000 repair with all the flooring, drywall, insulation and mold remediation necessary. Plus, instead of 6 weeks, it’s now 20.

Too much for you to deal with, and with no money of your own at stake, you can just walk away.

Of course, you would never do that. But the bank doesn’t know you, remember?


But There is Hope…

Remember at the beginning of this article I talked about Brandon's book? Brandon wrote that book because he used to be where you are now. He was young, working a job that didn't pay very well, and had nothing in savings. He didn't have bad credit; he had no credit.

Brandon owns 45 doors today and is continuing to add to his inventory whenever he finds a good deal. He still uses other people’s money. But his track record shows he knows what he’s doing, and his lenders know they get repaid. He uses the same lenders time and again. They believe in him now because he has proven to them that he is a safe bet.

Bad Credit + No Money + No Experience = Ultra Super-High Risk

Your credit score is a numerical representation of your past promises. It gives potential lenders an idea of your ability and willingness to pay back money borrowed.

Even worse than no credit is bad credit. Bad credit shows lenders that you don’t keep your promise to repay them. No credit shows you have never made that promise in the first place — because you haven’t borrowed any money.

“I Don’t Have Money/Credit/Experience, But I Have Passion!”

As the Community Manager here at BiggerPockets, I spend a LOT of time in the Forums, and time and again I see people saying they have passion for real estate.

That’s great. I have passion for real estate as well. I LOVE LOVE LOVE talking about it in almost any capacity. But passion doesn’t pay the bills, does it?

Passion isn’t completely worthless, though. Passion carries through in your voice and your face. It’s easy for others who share your passion to pick up on it. You may not be able to FUND the deal, but that doesn’t mean you can’t bring SOMETHING to the deal.

Related: Investing With No Money Down: Are You Ready for the Terrible Truth?

Do you have a partner? Do you know someone with money who would be willing to invest with you? Do you have a great deal? Do you have construction skills? Do you know great contractors? Do you have a great attitude and willingness to learn?


That last one is truly key. You might have no money, bad credit and no experience. Everyone in this business started off their career with no experience. Find someone who has experience, and offer to help them out. Make it clear that you don't expect anything but education in return.

BiggerPockets’ very own Scott Trench, Director of Everything, started out this exact way. He had been listening to the BiggerPockets Podcast for a while, and a chance tour of our old offices provided an introduction to Josh Dorkin.

After his tour was over, Scott went back over to Josh and told him that if he ever needed help, Scott would gladly come in on the weekend and give him a hand. He gave Josh a list of things he felt he could help with, made it clear that he was not asking for compensation, and left it at that.

It wasn’t very long before Josh called Scott in for an interview. Scott obviously passed the test and now works here with a fairly sizable role in the company. And Scott is really young — like 12 years old. Very little experience, but he offered something that was needed. And he had no other expectations.

So if you can’t bring money to the deal, what CAN you offer a potential partner? It is still very possible to invest in real estate without money of your own. But why would someone want to include you in their deal? Start looking at what you CAN bring, and then start offering it up.

Have you successfully invested in real estate without using your own money? What did you bring to the deal?

Let me know with a comment!

Mindy Jensen has been buying and selling homes for more than 20 years. She buys houses, moves in, makes them beautiful, sells them, and starts the process all over again. She is a licensed real est...
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    David Roberts from Brownstown, Michigan
    Replied almost 5 years ago
    I like the grant cardone approach. You can read and educate yourself but at some point you just need to do a deal. Even if the deal isnt the best, its the only way to really gain the knowledge you cant learn.from talking and reading. Nothing like experience. And when you are afraid, thats when you know you are headed in the right direction. I thin people keep reading books hoping to find a way that will be no time, little to no effort, and suddenly things will just happen magically. It will never happen if you dont face the fear of jumping in. Commit and figure it out later. Use common sense. Thanks for the article Mindy i always enjoy them.
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied almost 5 years ago
    Thanks for reading, David. Yes, at some point, you do need to jump in. I see so many people focused on getting the deal. If you just decided to look into real estate investing, learning should be your first step. You won’t know what a good deal is, unless you learn your market. I am a HUGE proponent of offering to help other investors. You can get a good feel of investing – and all the issues that go with it – without risking your own money. Be present, and be quiet. Listen to what’s going on, and learn. Thanks for reading!
    Shelly F. Realtor from NW Suburbs of Chicago, IL
    Replied almost 5 years ago
    Great post Mindy, taps into the hearts and minds of many newbies trying to jump into real estate. Well balanced viewpoint shared, with still a glimmer of hope for those willing to dig in and hustle for opportunity. Thanks again! 🙂
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied almost 5 years ago
    Thanks for reading, Shelly. Dig in and hustle for opportunity. Absolutely!
    Nandy B. from Irving, Texas
    Replied almost 5 years ago
    Great article! I’m a newbie in DFW TX area and I’m interested shadowing or being coached by a seasoned investor. I have been attending REI clubs and organization in my area in order to make connections and build relationships with potential mentors and future partners. I find that most investors are likely to accept help from someone they know and trust will carry things thru and do them well. I find that a lot of people keep asking me to “just jump in with both feet, or you wont get started at all”. I could wrong, but I think this articles points out the important of taking the time to build relationships and and learning before you tackle bigger projects. Thank you for the article Mindy!
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied almost 5 years ago
    Nope, you read it correctly, Nandy. I think trying to locate 100% financing because you have no money of your own and bad credit isn’t the first step. You should learn the market, learn the basics, and after you’ve learned, if you still don’t have any way to purchase the property, learn hands-on by helping another investor. Yes, you will need to build a relationship with the investor first. But going to meetings, and proving that you show up and are present, will go a long way to building that relationship. Thanks for reading.
    Kory Thaut Investor from West Linn, Oregon
    Replied almost 5 years ago
    What, you mean the real world isn’t exactly like the reality TV flipping shows? j/k Good base of information for newbies to absorb first. People easily forget about the “maintenance” costs of housing and when doing analysis get biased to the “best case” scenarios. good article.
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied almost 5 years ago
    OK, you got me, Kory. The real world is EXACTLY like those shows on TV. I’m just trying to keep all the good deals for myself. You can ALWAYS wrap up a flip in an hour, and all the problems you face are miraculously fixed while you sleep. The fixit-fairies come in and get it all done for you. Thanks for reading!
    Brian Gibbons Investor from Sherman Oaks, CA
    Replied almost 5 years ago
    OK there are 5 things you need as a Real Estate Operator, not Investor. 1. Find Motivated Sellers, some for flipping, some for assigning-double closing, some for seller financing. 2. Find Buyers – Cash Buyers (retailing) , Tenant Buyers (lease options), Owner Financing Buyers (Wraps) 3. Find Partners – Cash Partners for a % of return, 50 50 partners, Down Payment Partners, Realtor Partners for marketing help 4. Learn SDIRAs – Learn Prohibited Transactions, Disqualified Persons, and the “Private Banker Concept” from Custodian Say over and over, “Bank Loans and Credit? I don’t need no stinkin’ Bank Loans and Credit!” lol 5. Learn COI Marketing, Center of Influence Marketing, 9 Steps 1. Target your Centers of Influence – Who can help you grow your business – Write down a list of your ideal contacts and a brief profile for each. 2. Define your value What value can you offer these Centers of Influence? – what do you bring to the table? What skills, contacts, information or resources do you have? 3. Points of contact – Where do your Centers of Influence congregate? Think Chamber of Commerce, Kiwanis Club, etc. Who does existing networking contacts know that can introduce you? 4. Assemble your information what materials will you use to put your best foot forward? Do you have a web site that looks credible and professional? Do you have a few “Core Issue Articles” that outline your expertise? You need to be ready with this material when you make contact. 5. Put out the word An introduction to a Center of Influence will always trump a cold contact. Let those in your current network know who you are looking for. Send an email or letter and follow up with a telephone call. Then ask, “Who do you know who…” Then get their advice on the best way to approach this Center of Influence. 6. What’s in it for them? If and when you gain access to a Center of Influence, what are you going to propose? You can’t just say “Here I am, please send potential clients my way.” You need to have a compelling reason (also called Value Proposition) for them to associate with you. What exactly are you offering and what do you want them to do? 7. Invite them to participate A great way to build the foundation for a relationship with a Center of Influence is to hook them up with others in your network. Invite them to a workshop, seminar or networking function where they can make valuable new contacts themselves. 8. Stay in touch system Once you’ve made contact and have established the foundation for a relationship with a Center of Influence, you need to keep your ideas and value in front of them. How will you do that? An eZine how to articel, personal mailings, telephone calls or in-person get-togethers? 9. Reward your Centers of Influence When a Center of Influence sends you a lead to a new potential client, make sure you show your appreciation. A phone call, a hand written thank you note and even an appropriate gift lets them know you that you don’t take their assistance for granted. Also, keep them in the loop with your progress with this lead. I am a Real Estate Operator, not a 20% Down Buy and Hold, or 3% FHA House Hacker, so maybe I am not a traditional REI. I am a Creative REO. Real Estate Operator. Thanks Mindy for the entertaining article! 🙂
    Roy N. Rental Property Investor from Fredericton, New Brunswick
    Replied almost 5 years ago
    Mindy: This is another example of why I asked for the “virtual cork board” feature a while back … now when I get those weekly phone calls or messages, “I have no experience, no money, how do I get into real estate?”, I’ll point them here.
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied almost 5 years ago
    Thanks Roy. I made a ticket for it!
    Anthony Jenkins from Cleveland, Ohio
    Replied almost 5 years ago
    I’m going to take everyone’s sound advice and absorb as much knowledge as possible before I really get started in this business.
    Zachary Sargent from Bloomington, Illinois
    Replied almost 5 years ago
    This was informative. I’m in the process of securing finances to get my first deal. It’s terrifying but good at the same time. Thanks for the article.
    Mike Cardona from Antioch, California
    Replied over 4 years ago
    Great article Mindy. I just listened to your podcast episode on BP, very inspirational 🙂
    Curt Smith Rental Property Investor from Clarkston, GA
    Replied over 4 years ago
    Hi Mindy, small typo, Scott Trench doesn’t LOOK 12 yrs old? LOL But the story about offering value in exchange for an opportunity to learn is a great story.
    Memo Hernandez Homeowner from Las Vegas, NV
    Replied over 3 years ago
    Very very Real and Informative Thanks