Sorry, Newbies, But Any Real Estate Strategy Requires Significant Money: Here’s Why

by |

One thing is for certain and that is this: If you want to play, you have to pay. And unless you have the money, forget about anything that I’m about to say. Go out there and hustle. Work two jobs if you have to and save $50,000. Then consider getting started in real estate. Until you have $50,000 in your account, forget about it. Immerse yourself in any and everything real estate, learn every day about how to invest, but don’t actually pull the trigger. Now, you can argue with me later (by all means, comment below), but in my opinion, it takes money to make money. If you do not have any money, I don’t believe in any other strategy out there.

Download Your FREE copy of ‘How to Rent Your House!’

Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.

Click Here For Your Free Guide to Renting Your House

Buying & Holding

Let’s talk about buying and holding. I personally don’t believe in financing. If you are going to be buying and holding, you’re going to need a lot of cash. Now, if you’re going to be buying and holding, you need to be making a lot of money in your 9-5, you need to have a ton of equity built up in your personal residence, you need to have an inheritance, you need to have a ton of cash savings, and you need to have money in your retirement account. I’m a little bit biased here because I do run a turnkey company, and we do only sell properties to cash investors, but let’s forget about me right now. The number one reason why investors declared bankruptcy during the global financial crisis was that they were over-leveraged. They didn’t control their destiny. The financial institutions controlled them. They requested the funds to be paid back, and they called the loan on them. On the other hand, when you are using cash and cash only, you are the master of your fate. So work hard, at your 9-5 or whatever it may be, save the cash, and then start buying and holding.

Related: 7 Sharing Economy Side Hustles Real Estate Investors Can Use to Earn Extra Cash

Buying, Fixing & Flipping

Now, the second strategy is buying to fix and flip. For all of you folks out there who may not make a lot of money in your 9-5 and want to jump in, once again, please remember that you can’t do fix and flips without any cash. Please, I’m begging you—do not borrow money, do not take on any hard money loans. Don’t go to the financial institutions; just do it the slow and the hard way. Work your butt off, save the cash, and buy, fix, and flip with your own money until you know what you’re doing. Then you can supercharge your efforts by going out and using someone else’s money. So buying, fixing, and flipping is perfectly suited for those folks who have saved the cash. They might not have a 9-5 where they’re making a lot of income, but they may want to put their real estate efforts on steroids and get dirty every single day. Buy, fix, and flip as many properties as you possibly can.

My word of advice to all of the incoming buy, fix, and flippers is this: Start out small. Don’t go out there and buy a ridiculously expensive property. Use whatever cash you can scrape together after working hard to buy a rundown distressed property. Just remember to keep it simple and don’t get into a full-blown structural rehab. Buy a property that needs a cosmetic touch-up, maybe requiring paint, new carpet, re-lamination of countertops, tile in the bathroom, a new vanity, a new mirror, new light fittings, etc. Invest the least amount of money that you possibly can, and list the finished product on the MLS, on Craigslist, and on Facebook. I mean, you have to absolutely hustle to get this property sold and then use that one property as an example of what you’ve done so you can potentially go out into the market and raise more funds to supercharge your efforts. Personally, I would use your own cash for as long as you possibly can. Buy something for cheap, renovate it, sell it, and do it again. And if I were you, I would do between 5 and 10 buy, fix, and flips myself before I would actually buy, fix, and hold. So buy, fix, and flip for as long as you can, generate those cash profits, and use them to supercharge your efforts.

Related: Why You Should ONLY Invest Based on the Cash Flow


And last but not least is the strategy of wholesaling. Remember, when I started this vlog, I said that it takes money to make money. Yes, hypothetically you do not need to have cash in your account to wholesale a property, but let me ask you this: What’s going to happen if you put a property under contract and you’ve got 30 days to close on it, but you don’t have the cash in your account to close? At this point, you may not be competent enough to find a buyer who is going to buy that property for more than you’ve got the seller under contract for. Not only will you throw dirt on your reputation, but you’ll have to deal with a very sticky situation.

That’s a situation I’d never want to put myself in. Have I bought awful properties in the past? Yes, I have. Some I didn’t inspect properly, and others I pulled the trigger on too soon. Still, I sold the properties even if I lost money on them because my inner peace was at stake. I cannot look a seller in the eye who needs that money. You shake that person’s hand, and when they need you to perform, you have to perform. Everyone out there looking to wholesale without any money in your account is going to be letting a lot of sellers down. You’re going to lose your reputation. Is that what you really want?

If you want to do it the right way, this is how you do it: Find an absolutely amazing, undervalued, bargain property. Have the cash in your account as a backup to close on it if you have to. Then start marketing that property for whatever your margin is. Of course, leave enough meat on the bone so whoever wants to buy it can fix it and flip it. Then, if for whatever reason you do not find a buyer to purchase the property from you, but still it’s a spectacular deal, close on the transaction yourself. Buy the property with cash, then either fix it and sell it yourself or continue marketing it. If the deal is that good, someone will buy it from you. I’m not going to get into the legal side of wholesaling. A lot of people say it’s legal, and a lot of other people disagree. I’m just saying this: Have the cash in your account as a backup so you can perform on the transaction. Depending on what state it’s in, you might even have to buy the property with cash and double close on it.

I strongly believe the first thing you have to do is go out there and work hard to save enough money to start your real estate investment endeavor. Any one of these three strategies can work really well. I’ve used all three in my real estate business, and I’ve done very well implementing all of them.

What do you think? Does starting out in real estate require significant cash reserves?

Leave your thoughts below!

About Author

Engelo Rumora

Engelo Rumora, a.k.a.”the Real Estate Dingo,” quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.


  1. Thomas Phelan

    I agree and I disagree. It is always better to be cash strong. If you own outright a fix and flip and the repairs take a bit longer and are more costlier than anticipated you can weather the storm much easier. The same is true when you market the property. I helped a couple of guys with IRAs buy all cash a Condo and then repair it. We figured three month to sell and close, it took six. Without a mortgage to pay the extra months did not send my clients into a financial death spiral.

    The same is true when an IRA buys property, it can use a mortgage if it is Non-Recourse but again for peace of mind I suggest an all cash transaction.

    • Engelo Rumora

      Thanks Thomas,

      Folks are lazy and always looking for a “get rich quick” scheme.

      That’s why the “guru’s” are flogging all kinds of wholesaling and “no money” down crap to easy prey.

      Have you ever seen anyone sell a course on ONLY USING ALL CASH WHEN INVESTING? hehe

      Being patient, saving the cheese (cash) while at the same time soaking up every ounce of real estate knowledge should be the “slow and steady” way of getting started.

      Use cash and your cash only to enter the market and buy your first deal.

      Leverage is for those that know what they are doing and not for beginners.

      Just my opinion

      • Gary Wyatt

        Hey Engelo. I am am just getting started in real estate investing. I did take one of this courses on real estate investing. I learned so much. I have been reading, watching webinars, going to REIA meetings and networking for so long now. I feel I have learned quite a bit about the business. That was a real bummer when I read that you said that I needed cash to get started. That is exactly the way I was going to get started. I am retired military and the US Postal service. I have all the time in the world to invest into my new real estate venture. I am just lacking the “CASH” to get me started. I can wholesale till I get enough money, sure, but I was hoping to get in a a fix-n-flip if the right deal come along.

        I have about $60 equity in my home, and I was going to use that to get started. If I had a company that was going to lend me money, with a promissory note where he could take that money if I defaulted out of my equity.

        So are you saying that I shouldn’t do anything like that in doing a deal. It is almost like having cash, but my the equity in my house would be on the line. I could lose it if a deal went south. But isn’t that what real estate is about? You have to take a chance or you will never go anywhere.

        What if I were to use this equity in my home to get cash to partner up in a fix-n-flip?

        In your opinion, am I getting myself in trouble in doing it this way?

        I would appreciate any advice.

        • Engelo Rumora

          Thanks for your comment Gary,

          I posted some comments below with some NO BS tips for you.

          Keep in mind that my way of thinking is not for everyone.

          I choose the “No Fluff” route of hard work and ZERO finesse

          I leave the finesse stuff to the so called “experts”

          Much success

      • Yvonne Hermans

        I totally agree with you! I’m a newbie-just got my real estate license 2 weeks ago and have saved enough. I’m doing the research now-analyzing as many deals out there as I can- before I jump into the fray. I think if I can analyze a few (10-15) real world fix and flips from beginning to end correctly then I’ll be ready to start. Might take some time but in the meantime I’ll be building my team, learning about the real estate business and hopefully becoming an expert in my farm/market. Patience is tough for some so I understand the frustration when they hear this very practical advice. Thanks for validating my plans!

  2. Shawn Ginder

    I see your perspective, and some what disagree with the number that is needed before getting in. Lost time, being a big factor delaying getting in by waiting too long to save the cash. Understanding the market cycles is a key factor, you might have the cash saved but buying at the high of the market won’t help. Lastly, starting small, if not careful could have you buying the wrong deal in the wrong part of town when only working with cash. We have friends who’ve spent the last 15 years investing all cash but in rough neighbourhoods, and they struggle to make it through. I see your perspective, but have friends who have walked a hard journey in a difficult neighbourhood all in an effort to do it only with cash. Truth be told they own several free and clear but most of them are in areas that are rough so have high turnovers, and difficult pool of tenants to choose from. There are many sides to each perspective, I know for certain we wouldn’t be in Realestate today without the use of leverage, that gives us cashflow that will aid in our personal debt reduction. Time spent learning has been key for us, and connecting with a mentor has been instrumental, and running numbers on 300+ properties before pulling the trigger has help us in a lot of ways.

    • Joseph M.

      I agree with Shawn, you can possibly make a mistake by purchasing inexpensive property and “paying all cash”. That’s when you also get your other education in evicting tenants and learning about high turnover rates. Only through leverage I’ve been able to purchase multiple properties and make them rentals. There is nothing wrong with the Dave Ramsey philosophy of being debt free and paying all cash. But most people would have to wait sometime before they actually had that amount of money. There should be a happy medium where you can attempt to accomplish both. Engelo wouldn’t sale many (if any) books if he told people they needed to have 50k before they started to invest in real estate. Why 50k? Why not just say 100k? If you were looking to purchase a multifamily house and were new to real-estate you would need a really good paying job to pay all cash. But how long would it take you to purchase your second if you used that approach, and your third and so forth?

      • Engelo Rumora

        Thanks for your comment Joseph,

        I’m in the process of finishing a book and am looking forward to it being a “worst seller” lol

        There are too many folks that write books on “how to” but don’t know “how to” do it themselves.

        There are quite a few such folks on Bigger Pockets

        I prefer walking the walk and letting my actions speaking louder than my words.


        ps. $100,000 in savings is even better. It would all depend on how expensive your market is. If I was stripped away from everything today. I’d find 2 jobs, work day and night and I’d be able to save a minimum of $50,000 a year.

        2 years of that and I’d be back in real estate flipping my first property 😉

        • Nicole Frawley

          I feel like thats the opposite of what you want to do to acheive early financial freedom which is a huge reason people get into real estate. Of course its the best way but not the most practical. Brandon turner is a good example of someone who used leverage to be very successful through househacking.

  3. I agree and dis-agree. I like the fact that you are telling new people to have a good amount of cash reserves. I think anyone that enters any business should be in a strong cash position. However, I believe that you sometimes need to take risks. And there are plenty of investors out there already doing flips, wholesales, buying rentals, etc that you could be learning from. You could also be borrowing money from these people. It’s ok to take some risks every once in awhile and not be so conservative.

    • Engelo Rumora

      Thanks Zac and agreed.

      The “hidden” message in my blog is to STOP looking for the “easy way”.

      Success in real estate isn’t easy no matter how you invest.

      Folks get their eyes smudged all the time and fall prey to BS strategies sold by BS “guru’s”.

      Most don’t succeed because they give up and it’s too hard.

      Saving $50,000 is very hard so I suggest everyone proves to themselves that they can do that first before trying anything else.

      Have a great day.

  4. Great article- We own a 55 plus complex- A good number of our tenants lost their homes during the 2008 recession- due to the fact that they were over leveraged . My motto is this- IF its not paid for- you don’t own it. Many try to use the cash flow after expenses plus appreciation to pencil their investment. You cannot always count on your property to gain wealth- the market floats up and down and if an investor is in a weak financial position, sooner or later they will be culled out by market. Remember- the market does not care about your personal problems- your financial strengths or weakness- your equity or lack of equity in your investment. I live by the three Tee’s- TALENT- TIMING- TENACITY – BUT IT ALWAYS COMES DOWN TO (TIMING ).

    • Engelo Rumora


      Brilliant F#$%ing comment mate…

      Yes and Yes.

      Borrowing is “easy money” for the ignorant.

      The bank owns your A$$ and gets to do whatever it wants with it lol

      Learn first by using your own cash and loosing your own cash (You will loose when starting out)

      Then consider financing at a later date.


  5. Jordan Sutherland

    That is absolutely ridiculous. I agree that it’s a good idea to have cash reserves and try not to over leverage yourself. But how can anybody like me in the middle class EVER make money by doing things like that. Paying all cash for my first rental???? Ok, let me just save up for 5 years to earn an 8% return on an all cash purchase. I’d be better off investing in mutual funds.

    • Fair enough Jordan: I see your point and I too when first starting had to finance for a while to get things paid for. You might of missed my point. I was only sharing my 40 plus years of investing experience and what its like to see friends and relatives lose their homes because they were over their heads. I did not mean you should not try- Only meant that the market can be fickle- but of course we have to take risks in real state. Our motto was also that if we did have to finance- we would make a promise to pay it off in a certain time frame- like 5 years max. That lessens one’s exposure. Most important thing we have learned is to buy smart in the best location and have a reasonable cash cushion for the unexpected. Good luck on your investing

      • Gary Wyatt

        Hey Dennis. I wanted to get your opinion on this as well.

        I am am just getting started in real estate investing. I did take one of those courses on real estate investing. I learned so much, and have been spending every day reading, watching webinars, going to REIA meetings and networking for about 5 months now.

        I feel I have learned quite a bit about the business, however the only way I am going to be able to get started is my borrowing money. I am lacking the “CASH” to get me started. I can wholesale till I get enough money, sure, but as you stated, time is money. If I wait to save $50K, I will not be able to start this for at least 5-7 years. I was hoping to partner in getting in a fix-n-flip deal if one comes along.

        I have about $60 equity in my home, and I was going to use that to get started. I have a company that will to lend me money, with a promissory note where he could make me refinance my home and take that money if I defaulted out of my equity.

        What is your opinion on me borrowing money against my equity, to get started. Should I not do anything like that to do a deal? It is almost like having cash, but my the equity in my house would be on the line. I could lose it if a deal went south. But isn’t that what real estate is about? You have to take a chance or you will never go anywhere. I don’t think that I would have a deal go south though.

        What if I were to use this equity in my home to get cash to partner up in a fix-n-flip?

        In your opinion, am I getting myself in trouble in doing it this way?

        I would appreciate any advice.

        • Gary: Thanks for your interest in my getting my opinion. Borrowing is a very personal decision. A smart investor should always base his or hers actions on their unique situation. Ask your self these questions. How stable is my employment? If self employed- How clear of a near future do I see going forward? Am I buying at a high or low in an ever changing market? Do signs of a recession appear to be around the next corner? If I do jump in- Do I have enough of a cash cushion to weather any un seen expenses? ( TRUST ME- IF YOU BUILD IT_ THEY WILL COME) But as you said wisely- We all are risk takers, so at some point we do our best research- Look for the best deal in the best location and dive in. I borrowed when I first got started. We decided to never borrow for an investment for a long term mortgage however. We usually planned on having the house free and clear by aprox- 5 years then we could use the returns like a bank would and leverage our next investment with our own money. Make any sense? If you use your head, you’ll be just fine. Good Luck.

        • Engelo Rumora


          If it takes you 5+ years to save $50,000 than you are doing something very wrong.

          * Work 2 jobs if you have to.

          * Sell your house and rent.

          Nothing comes easy and I still rent to this day and making my money work for me.

          Prove to yourself that you can do that first before anything else.

          I’ve been in real estate for almost 7 years now and the S#$% storm that awaits you will be nothing compared to even your worst nightmare.

          It’s a very tough gig mate

          Just my opinion and I wish you much success

    • Exactly, How I took this blog. I took out a loan flipped a single family that cost me 40K, dropped roughly 20K into it to make it a duplex and I’m making $1,600 month. Not much but I’m in it for the long run. I’ll be flipping my next home from a loan also. gotta do whay you gotta do.

  6. Kevin Sapp

    Great comments and information. One additional, possibly contradictory comment for fix and flips from a money lender to a newbie flipper. I completely agree with the no structure modifications, only cosmetic. These are tough to find in low priced areas, old houses with sinking foundations are common. As a lender, I would much rather lend a newbie 150k in a 250k area than 50k that is in a war zone. The lender wants something that has current value that they can sell with minimal loss if the deal or market goes to … pot. So, starting small dollar with a lender is not enticing for me if the property needs tons of work. As a known local lender, we have contacts and now skin in the game, we want ya to succeed so you come back for more. If ya run into problems, tell us, our interests are aligned, we will get help for ya, heck, I had my kid do demolition for one of my borrowers…lenders are your friends!

    • Paul Merriwether

      Properties with huge issues like termites, foundation work are great investments because the sellers are eager to get rid of them knowing the homes need work. A good home inspection or termite report showing thousands of $$$$ of needed work is a DIAMOND IN THE ROUGH!!!

      Yes, a contractor will charge BIG BUCKS yet being a DIY person you’re in the money!!! You’ve bought the home at a discounted price. Doing the work yourself will save you THOUSANDS.

      A contractor gave me a price of $50,000 to replace the foundation on one side of my home. He came with 50 pages of references for work completed on hundreds of homes. I said no thanks. I capped that foundation did everything for $2500!!!! With the help of a book, your local permit department and plenty of sweat equity it only takes you some time to do the work and get paid!!!

      Do a refi, pull cash out or sell the property and move on to the next one with that $50,000 cash in hand!!! Working and trying to save $50,000 is DUMB!!!!

      • Engelo Rumora

        You’re saying that saving $50,000 is dumb because you never had $50,000 in your account lol

        In order to buy that termite infested S#$% property as a rookie, you will need cash.

        Also, saying that folks can just DIY on foundation work is DUMB

    • Gary Wyatt

      Good post Kevin. I have a question for you. With you being a lender, if I don’t have cash, but I have $60K equity in my home. Is there a way you could work someone in that situation; like some sort of promissory note where you could force me to refinance my home, and take the money that is due you? I really don’t want to refinance, because we have only been in our home for one and a half years. We would have to pay closing costs and fees, that we want to try to avoid. ‘

      Any advice is welcome. Thank you.

    • Engelo Rumora

      Thanks for your comment Kevin,

      If i was a lender, I would never lend to rookies as that is a recipe for disaster.

      No matter where or what they are buying.

      I’d want to see a proven track record before throwing money at them.

      Thanks again

  7. Eric D.

    Very true. You need money to make money. In the off chance you get a property that you can buy and sell at the same time, for a no-fixup flip, it can happen. But never plan on the in a million properties that can actually have that happen.

  8. Susan Maneck

    I think more important than having a lot of cash is to have good credit. I live in an area of the country where real estate is dirt cheap and rents relative to real estate prices surprisingly high. I paid cash for my first house which cost 15K. Turned out it needed 30K in repairs. I put those on my credit cards using cheap balance transfers. After a year I got a HELOC on the house, paid off the credit cards and had money for a second house. After that, it was off to the races. I think for a young person, the place to start is house-hacking with a FHA Kiddie-condo loan.

  9. Christopher Smith

    I’m not against the VERY JUDICIOUS use of debt even though I have always been strictly a cash investor myself. In fact I would have probably done even better than I did (which was great) had I been willing to take on some debt when I was buying big in the 2010 to 2012 time frame in the far East Bay Area of CA.

    However, having said that, I am really beginning to wonder if the Newbies that seem to be rushing in en mass currently should be loading up on as much debt as many appear to be. Property prices now are very high in most areas of the country (totally unlike when I was buying in force in 2010 to 2012), making it quite likely that these Newbies are way over paying for their properties. In the same vein, they are probably far over estimating the amount of net long term rent they will ultimately be realizing. These are just classic Newbie mistakes.

    This situation is potentially the setup for some very real problems down the road for these folks if the country experiences even a modest negative bump in the economy and all of sudden those over stretched rosy assumptions that they made justifying the acquisition of these properties with big debt balances turn to sand between their fingers tips. If so they are going to be potentially sitting on a portfolio of rapidly depreciating properties and a mountain of totally unsustainable debt, and we know where that goes.

    I have even seen a couple of recent podcasts on this website that appear to be far over reaching in an effort to be able to justify the acquisition of what appear to me to be marginal properties for the prices ultimately paid. Not sure that is wise either.

    • Engelo Rumora

      Thanks Chris,

      Guess what happens when the bottom falls out?

      Investor like yourself and myself swoop in to buy all of the dirt cheap properties for 10 cents on the dollar

      And how do we buy them?


      It’s crazy how much controversy this blog has created across numerous platforms and there is one common theme.

      Everyone want’s to use leverage.

      While they all load up on debt, I’m hoarding cash

      Waiting patiently to pounce lol

      Have a great day

  10. Engelo Rumora

    Hey everyone,

    I’ve noticed something really interesting.

    All of the comments here (the actual blog page) are much more constructive unlike the trolling going on via the Bigger Pockets Facebook page hehe

    I’d prefer more heat on here than Facebook so give me fire… haha

    I love it lol

    • Bryan Lee

      It’s called passion! Everyone commenting wants to learn from each other. Including myself. I just started earlier this year saving up money to buy my first property. Got a ways to go but it is growing. Within the next year to year and a half me and my wife’s income will double in which will help with paying our personal debt down and saving more cash. Love reading and learning from this site.

  11. Joseph Appelbaum

    I am a newbie and don’t have much money. I would like a bit of encouragement and advice as to how I can find and finance properties. I am thinking of purchasing inexpensive properties for cash in Detroit. What do the experts think? I found some properties on Zillow last night that were in the
    $5000.00 range. That is something that I can conceivably afford. Any experts out there who can mentor me int his endeavor?

    • Deanna Opgenort

      Joseph -Would you be comfortable spending the night at those $5k properties? Parking your car on the street overnight? Go to the local corner businesses…do you feel safe the corner grocery getting a pack of gum? You’ll be spending a LOT of time there….

    • Engelo Rumora

      Stay away from Zillow,

      You will need a bit more than $5,000 to work the Detroit market.

      I know you can buy solid B class properties on the outskirts for $10,000 – $15,000 that will need $10,000 – $15,000 and would be worth $50,000+ all day long.

      Send yellow letters and get busy on the phones.

      Much success

  12. Paul Merriwether

    So you want some HEAT!!! It’s DUMB not to use leverage in real estate investing!!! Trying to save $50,000 is a monumental task in today’s world. You’re buying and doing business in Ohio a state were property are very low in many areas. Property appreciation would also be low. EXAMPLE: 4620 Elmer Ave Dayton, OH 45417 on it’s being auctioned for $9,000. Why should a newbie try and save $9,000 when he can put it on a credit card with a check???

    Come to the East Bay where I live and pay $350,000 cash for a home similar to that home in a bad area!!!

    Paying cash for any home is DUMB!!! LEVERAGE is always the way to go. Paying a home off over time is a very good idea. Having sufficient cash reserves is a GREAT IDEA!!!

    • Sorry to disagree Paul- but One should always ask themselves prior to any investment- How stable is my job or business- Do I feel a recession around the corner coming on ? ect. Am I buying at a high ect? I agree that paying cash is something not everyone can do, but when there is no mortgage- the returns go into your pockets not the banks. And you further more will never have to worry about losing your investment. Ok some of us might appear to be be DUMB- but owing no one a dime has a nice ring to it, helps us sleep too.

    • Engelo Rumora

      You’re an absolute JOKE but I thrive on folks like yourself as they make me look SO GOOD

      If folks wanting to invest in the East Bay (That’s a JOKE in itself due to how expensive property prices are) can’t save even more than $50,000 with their ridiculously well paying jobs. They shouldn’t even consider real estate.

      Are you in the business of selling debt? You seem to be mentioning “credit cards” quite often.

      And do us all a favor by adding photo to your profile


  13. Thomas Phelan

    Engelo’s opening, “Sorry, Newbies, But Any Real Estate Strategy Requires Significant Money: Here’s Why” reminds me of a group of structural engineers after making a zillion calculations; gleefully report that it is physically impossible for a Bee to fly.

    I know of many instances where serious money was made ($20,000 – $50,000) in real estate without one cent being invested, no loans with co-signers and nothing illegally done.

    I do agree with Engelo that “cash is king” and if you have money to use and or back you up that is great. However, if you take Engelo’s suggestions a newbie without money would stay out of the real estate arena for perhaps years while watching the wholesale and fix and flip parade pass him/her by.

    Equally important as money is motivation and not having money is a very powerful motivation to get some and possibly rather quickly. Rarely do you hear a legitimate Real Estate Guru like Ron LeGrand claim he left his practice as a successful doctor or Lawyer to delve into real estate. To the contrary these people were often flat broke and desperate to improve their lives.

    But the truth is, just like a member of a Gym or a person who embarks on the latest Diet, many are called, few are chosen and typically not because the Gym or Diet failed, rather because the person failed to put in the effort.

    • Engelo Rumora

      Thanks for your comment Thomas,

      The “hidden theme” cross most of my blogs should come across as NO BS, motivational, inspirational, blunt, no hidden agenda, etc…

      I always stress that in order to succeed “hard work” is a must.

      I succeed because I work harder than anyone else.

      I’m probably one of the most uneducated folks you would ever meet but I sure do work my A$$ off.

      I wish for people not to be lazy and to stop looking for an easy way out.

      When everything else fails, nothing beats hard work.

      Thanks again

  14. David Krulac


    I agree that buying with cash resolves a lot of problems; and I’ve purchased the last 100 or so properties without using any financing. Makes the decision process and the ability to buy quickly so much easier. And I’ve never used hard money either, as I’ve found that the interest rates and points were more than I wanted to pay. Many of the purchase venues that i use like auctions, both live and sealed bid don’t lend themselves (pun intended) to financing these types of purchases.

    But on the other side of the coin, I bought my first 11 properties with 100% financing; borrowing first, second and signature loans from banks and credit unions. So I’ve progressed from 100% financed to zero % financed and I truly believe that it is progress, and is more independent and more freedom.

    However, if at the beginning, I had waited to buy my first property until I had all cash, who knows I still might be waiting. But instead of waiting I’ve bought and sold over 900 properties, while the contra me would be waiting on the sidelines and not getting into the game.

    David Krulac
    BP Podcast #82

  15. Edward C.

    Appreciate your perspective on what it takes to be a successful real estate investor. Hear echoes of Trench’s perspective on having a base of capital from which to invest and begin the journey.

    Agree with others that use of leverage could accelerate growth and improve ROI. That being said, think you were trying to point out the fact that starting with some capital is preferred to jumping off the deep end with nothing. I generally agree and welcome your continued thoughts on the topic.

    Much thanks.

  16. lost a lot buying a turnkey from a so called reputable turnkey firm….purchased a C class SFR with so so rehab done with a loser tenant in place for about $50k. 6 months later after damages and eviction costs I blew about $25k to get the home rent ready again and still paying for repairs and maintenance here and there. It’s not looking good for me as I’m now trying to buy my own primary residence and I’m getting my down payment through a hardship withdrawal from my 401k. Real estate is glorious for some but not for me.

    • Engelo Rumora

      Sorry to hear about your loss Hugo

      Learn from the mistakes and proceed in a smarter way next time around.

      The defeats make us better investors in the long run so don’t let this temporary setback get you down.

      I wish you much success

  17. Lauren Robinson

    Thank you for writing this article. There are a lot of would be investors in their research phase getting a lot of misinformation. I wanted to get into real estate investing for years and read a lot of blogs and attended several “guru’ seminars that touted that you could get started in this business with “OPM” (Other People’s Money) and zero of your own. This type of language is misleading at best, as it is only half the story. They do not explain all the transaction costs that you incur during the lifecycle of a fix and flip project that you may not be able to cover with a hard money loan.
    I started my business in January of this year after cobbling together $25,000 to buy an $85,000 house. With the best research and planning, there will be things you miss or not account for. This home was in a decent neighborhood, it was an older home that had been well maintained by the previous owners, it only needed some cosmetic updates, and had comps in the low 200K.
    In hindsight, I wish I had $15,000 more in cash on this deal. I did not account for having enough cash to start the first phase of the renovation and wait for reimbursement from the lender. The lender wanted me to pay in full for 1 year of “vacant home” insurance. A water leak in the basement caused the water bills to spike and the renovation budget to hemorrhage. These “uh oh’s” needled away what remained of my startup funds. I am deep in my financial reserves to get this done but have learned some very valuable lessons I’ll take with me into my next project.
    All of that to say, I agree with your 50K starting estimate. I am doing business in Philadelphia and you can get a decent fixer house for 65K to 95K in an area with strong comps for a flip. Leveraging financing to cover your acquisition and rehab costs, 50K of your own money will help you comfortably cover your transaction costs. Investors that can do a lot of the renovation work themselves may be able to get started with less, but I would maintain a bare minimum of 35K.
    Again, thank you for painting a more accurate picture of what it takes to get started in this business.

    • Gary Wyatt

      Thank you Lauren for writing a post in a way that I can really understand from someone who started off like me. It is like real time information to me. I can relate to everything you said. However, I am one of those newbies, who bought a program; learning way more than I ever imagined, and I still am constantly read, watch webinars and go to REIA meetings and network. I have been going non-stop for about 5 months now. I do not have any cash. I was looking at using lender to get me started. I only have about $60K equity in my home that I was hoping to borrow against, without me having to refinance my home, to avoid all of the costs that come with a refi.

      Any advice would great. Thanks.

  18. David Goossens


    I bought my first fix and flip deal using seller financing. I borrowed $115k from a private money investor that wanted to be involved in REI, but without having to deal with an actual property. I am an electrician and had planned to do most of the work myself, but ended up hiring a GC to help me get the project done faster. We finished the rehab in 6 weeks and when the property sold, I made more money than most people make in an entire year. I spent less than $3k of my own money making this deal happen. While I agree that you need to be well capitalized to invest in real estate and that saving W2 income is a good way to achieve that, it is entirely possible to invest in real estate with very little money. I got lucky in my situation, but I was also prepared from studying bigger pockets articles and forum posts, and I worked my butt off to make sure I could repay my investor at all costs. In the end I got the deal done and made great money.

  19. Jon Lee

    Being somewhat new to BP I have read more than a few of your blogs and on most of your topics I REALLY AGREE with your views but holy smokes Engelo, I REALLY DISAGREE with your opinion on this…and let me share why:

    1) Whether it was your intent or not; you appear to be approaching the situation as if investing is an individual sport. Investing by nature is a team sport and there are people that a new investor can network, partner & JV with to make deals happen. All a new investor has to go do is plug into their local investor network to connect & establish relationships with those who not only have created success for themselves but those who are willing to help newbies. Those type of investors are out there…it’s not every person for themselves out there.

    2) You approach your opinion as if the investor’s own personal cash is the only leverage that counts and it’s the resource of value (other than some sweat equity and hustle as needed). Every fiber in my being rails against this because not only is this WRONG; this thinking hobbles the ability if an investor to maximize his/her ROI due to not understanding a) how financing leverages property & b) limits the ability to come up with solutions to structure deals that might not be the nice, simple discount buy that all investors hope for.

    3) Buy & Hold – While I agree to “not buy broke” meaning extending yourself in purchasing a property that one cant afford the upkeep or not having a reserve for the unexpected…there are options for newbie investor to use a private lender or equity partner to provide part or all the capital to acquire property. Again this is another form of leverage.

    4) Buying Fixing & Flipping – Again, I agree to start on smaller rehab jobs AND I know one doesn’t need to wait until they have all their own personal cash to do their first rehab. There is nothing wrong with leveraging someone else’s money to complete the first flip. A newbie can even partner up with an experienced rehabber & flipper to leverage both someone’s capital and get the supervised experience of completing his/hers first rehab. Waiting till one had enough money to use their own cash is WAY UNREALISTIC…especially for those who live in markets with super high values (Like LA, SF & the Bay area, Seattle, San Diego, New York City area, etc).

    5) Wholesaling – Your premise here is faulty….a) If people didn’t wholesale until they had enough money in the back, then that defeats the primary advantages of wholesaling for many newer investors. That is often the best way to some with very little or no capital to get started. If a investor got a property under contract & it is under contract at the right price; they can throw a rock in any direction and find a buyer….I’ve seen it too many times in the markets I invest in. You approach wholesaling suggesting that it is something that is inherently risky and one should fall on your own sword if something goes wrong or you can’t a buyer. 2) I have never closed on a bad property for the purpose of “inner peace” and I call BS if you say have. If the property is under contract and something unforeseen happens that I couldn’t account for and I tried in good faith to make the deal work but couldn’t find a win/win solution, then I will walk away…plain and simple. To knowingly close on a bad/risky buy is WAY WORSE than walking away. I also know that my reputation as an investor will not be harmed walking away from something that could cause a loss that could put a newer investor out of business.

    All that being said…I do really agree with most of your blog posts topics like investing for cashflow; the question to filter out bad partners; & the 3 folks most likely to rip you off (the first three that come to mind) but I do think that your opinions here are somewhat damaging & discouraging to newer investors and those who are hustling to make up for not having, in what your opinion is, enough of the “right” capital.

    • Engelo Rumora

      Thanks for your comment Jon and I appreciate the detail along with reading my other blogs.

      You mention “but I do think that your opinions here are somewhat damaging & discouraging to newer investors and those who are hustling to make up for not having, in what your opinion is, enough of the “right” capital.”

      If a newbie gets discouraged by my blunt and opinionated blog, then they have already lost.

      There are pretty much ZERO blogs out there preparing investors for what’s in store when they step out into the real world of real estate.

      My message is to kick people up the A$$ so they can wake up from the brainwashing they get from these “easy, get rich quick, no money down schemes, etc..”

      Nothing is easy in business and the biggest mistakes/losses are made by those that have ZERO cash saved up and trying to enter the world of real estate.

      They end up going in the red but worst of all, they end up damaging their reputation.

      Have a great day and I hope to catch you on one of my next blogs

      • Jon Lee

        I think that your opinions in this blog post are damaging and discouraging because I have to work with investor mindset with my people all the time…and I train folks to work in “possibilities not probabilities”. New potential need to know the truth that someone can come into the game without huge money or reserves and still get their foot in the door to build a portfolio & wealth. I have seen too many people with very little or nothing, learn, take action, network, partner with others for resources AND have great success…all without putting themselves at any more risk than an investor flush with capital.

        I think we’ll just have to agree to disagree on this one blog post…..I look forward to your future content.

  20. Philip Katz

    I’m stunned to hear all these investment stories for under 10k. Whee do you find decent investments below 100k? Admittedly, I’m not interested in any fix and flip. I’m looking purely for cash flow positive only. I simply don’t find anything that makes sense. I have decent amount cash in hand and good credit too, possibly upto 300k.
    Anything in a nice neighborhood is simply too pricey as an investment. So I’m just biding my time holding cash.
    Where am I going wrong?

    • Philip: I don’t think you are going wrong at all. You have cash and good credit. What you are is opportunity ready. Maybe not today or next week or 6 months from now-but if you continue to look-look and look some more, eventually you will find a property in a good location within your budget that strikes you as the right fit. At this point sense you are new to the game- I would seek advise from an old sage or two thats been around a while and get their opinion on your prospective property. You might be surprised on how they either will confirm your finding or maybe even find things about it that you had no idea to check for such as being structural valid. Roof condition- plumbing and electrical systems. ( which are the two things that can destroy your home )House inspectors don’t always point every thing out, but a seasoned property buyer knows by instinct what to look for. This adventure is not something to be fearful of, but its also not child’s game either. Do your home work and then do it again. The sad stories I know of were the results of acting too quickly and becoming too emotionally caught up in the property without doing due diligence in the research. Happy investing

    • Paul Merriwether

      Philip: What skills do you have in terms of construction. What is your markets condition? Buyer or sellers market? Do you know what you’re looking for in terms of a house or are you fixated on making money. With $300k in your pocket maybe you really want to be a short term lender! Buying a foreclosure in your area is that possible? Finding a home at a probate sale or tax lien sale? Your options are endless.

      Put the word out to many realtors exactly what you’re looking for in a home, real estate. They’ll find you a deal in short order if your expectations are realistic!!!

    • Engelo Rumora


      Look at the Midwest.

      You can find great deals all day long.

      Even in more expensive markets if you have a great acquisition strategy in place.

      Having the cash sets you up to find stellar deals on sites like, Hubzu, Hud Home Store, etc…

      Send out yellow letters and get busy.

      Much success

  21. Terrell Garren

    I think there is a sweet spot between no investment debt and leveraged to the hilt. I’ve used home equity loans probably 10 times over the last 10 years to close with cash and buy SFHs. The interest rate is < 3% and worst case if I lost my 9 to 5, I would use my 401K as a backstop. Now debt free with 14 properties and good retirement cash flow. Would not have happened nearly as quickly without reasonable leverage.

  22. Ryan Magnano

    I have to strongly disagree here.
    I can, however, understand your point of view, especially considering your business works primarily with cash buyers.

    But theres so many great ways for people to get started in real estate.

    For example, here in Volusia County, we have a Florida Bond that offers 15,000 towards a down payment to first-time home buyers, or anyone who hasn’t owned real estate in 3 years. Its forgiven at 20% a year as long as the buyer lives there, so if the buyer lives there for 5 years they don’t have to pay it back, making it basically free money. If the buyer moves out, the remainder is simply amortized into the mortgage with 0% interest.

    With the 3.5% down FHA and 5% down conventional loans available today, the average renter can invest in real estate very easily especially when combined with programs like the one above.
    Even one deal with little money down is all it takes to put someone into a much better financial situation, and net much more each year. This is all it takes to get the ball rolling.

    Everyone, please don’t let posts like this get you down. You CAN invest in real estate no matter what your current situation is, it might just take a little preparation.

    • Engelo Rumora

      Thanks for your comment Ryan,

      Folks that can’t save up cash won’t succeed with any other strategy in my opinion.

      Real estate is hard work and it takes huge commitment and sacrifice.

      Newbies run to the “easy option”

      Real estate investing and gaining financial freedom isn’t easy.

      That was the message behind my blog.

      Folks looking to leverage from the get go without having any cash are setting themselves up for tough times.

      In todays market, there aren’t many deals that make sense when looking to finance.

      Thanks again and have a great day.

  23. Paul Merriwether

    So you want some HEAT!!! It’s DUMB not to use leverage in real estate investing!!! Trying to save $50,000 is a monumental task in today’s world. You’re buying and doing business in Ohio a state were property are very low in many areas. Property appreciation would also be low. EXAMPLE: 4620 Elmer Ave Dayton, OH 45417 on it’s being auctioned for $9,000. Why should a newbie try and save $9,000 when he can put it on a credit card with a check???

    Come to the East Bay where I live and pay $350,000 cash for a home similar to that home in a bad area!!!

    Paying cash for any home is DUMB!!! LEVERAGE is always the way to go.

    EX: It’s possible to buy 10 $300,000 homes with that $350k cash. Thus owning property valued at $3 million. Vs paying cash for a $300k home just to collect monthly rent. (DUMB)

    Paying a home off over time is a very good idea. Having sufficient cash reserves is a GREAT IDEA!!!

  24. John Murray

    It is always interesting to hear points of view on real estate investments. I have been successful in all my real estate investments. I learned over the years that you do need money to invest. How much is the qualifier for what level you want to play the game. I started with $10K and when I left (relocated) I headed north on I-5 with about $200K with a 2 year old son, a pregnant wife and 2 dogs. I invested and worked hard for 15 more years and dumped all my real estate in 2005. I felt something was going south. My net worth was about $750K. In 2015 I quit my job and became a full time investor. My BRRR biz boomed and I have 8 SFH rentals leveraging about $3M. I started with $500K and will finance 2 of my SFH in October and will extract $150K. I will purchase 2 more SFH and I’m done with procurement. This will leverage about $3.6M with my skin in the game being $850K. This will net me about $100K per year in rent profit and pay little tax. Appreciation is just icing on the cake. My net worth is pushed north of $2.3M and most is liquid assets in an IRA and real estate equity. . This is my story and yes you do need money to start in real estate, it is a lifelong passion. Anyone that tells you different has never made any money in capital gains, passive or portfolio income.

      • Engelo Rumora


        I don’t think I have a post regarding why I don’t believe in financing as most of the content should be above in the text and in the video.

        With that said, I think folks are lazy and always looking for an “easy way out”

        That “easy way” doesn’t exist.

        Prove to yourself that you can save the cash and then get going.

        The cash just stands as a great buffer for when you F$%^ up.

        Most rookies do F$%^ up all the time.

        Thanks and don’t hesitate to ask any other questions.

        I’m happy to help

        Have a great F#$%ing day hehe 🙂

  25. Catherine Coy

    One of the MAIN features of real estate is leverage. There’s no other investment that benefits so handsomely from leverage. If you’re going to pay all cash, why do it in real estate? There are plenty of other ways to make money without the risk of real estate holdings. If I had listened to the author, I would never have been able to start investing in real estate, so thank God I didn’t listen to him. As for his snarky comments and veiled vulgar responses to those who don’t agree with him, well, that says a lot about him.

    • Engelo Rumora

      Engelo Wrote:

      Thanks for your comment Catherine but you don’t know who I am, what I do or how high my ethics are.

      So the pure fact of you stating about my “snarky” and “vulgar” comments speaks volumes of who you are and how quickly you jump at the opportunity of condemning someone.

      Why not address the other vulgar, and snarky comments by other members that are angled at me and my blog?

      I never claim to be right or wrong and have over 130 blogs sharing my opinion on various real estate topics.

      Why do you even bother reading and commenting?

      if you don’t like my perceptions feel free to stop reading and take your comments elsewhere.

      I would also like to take this opportunity and apologize to nobody.

      I’m blunt, rude and raw and wear my heart on my sleeve for what I believe in.

      My reputation is pristine and so are my business practices so there is really nothing to apologize for.

      Who get’s offended after reading a blog has already LOST in my eyes and should probably NEVER invest in real estate.

      if you can’t take a passionate opinion, then don’t bother reading or commenting.

      I’m glad that Dennis addressed you and he has obviously followed my previous content so he get’s the message behind the blog itself.

      I wish you much success

  26. I have enjoyed this conversation and everyone who has posted have tools that work for them- GREAT. But I think whats important here is to grasp what the Author is trying to tell New comers to this field. He is making the point that the more financially prepared an investor is- the more likely they are to succeed. If a newbie needs to borrow- they should do it carefully and methodically. Like the author pointed out- this is not a silly game, peoples life savings can be washed out in a 90 day period during a correction. I have lived through several- I know of which i speak. This reminds of the Baby Boomer retirement situation we have today. 48% of boomers reaching retirement today have put nothing into their retirement accounts. There are Bloggers out there and books and seminars galore trying to convince these folks that there is Hope- Don’t give up- Everything will be OK- Well sorry. US boomers have had our entire lives to prepare and if we did nothing to protect our selves the road ahead for those folks will be a hard one- Of course unless they inherit a fortune or win a Lottery. All the financial advisors in the world are not going to unroll 40 years of lost opportunity. Careful and Wise investing to all.

    • Catherine Coy on

      Joshua wrote: But I think what’s important here is to grasp what the author is trying to tell newcomers to this field.

      What the author fails to acknowledge is the power of leverage that’s available in practically no other investment. Used wisely–which wisdom the author believes he possesses in spades–one can turn a modest investment into a fortune. My goodness, there’s proof of this everywhere, including the current occupant of the White House. The author completely dismisses leverage, which tends to discount the rest of what he’s saying. No one believes anyone can amass significant wealth without skin in the game, even if that skin is delayed at the beginning of the quest. Someone can start with literally zero and achieve modest wealth. I personally know two people who have done it. It takes guts, to be sure, and good timing, but it can be done. The author turns vulgar when someone mentions this, which is unfortunate, because his warnings are valid. The author should apologize to those to whom he directed thinly veiled insults using special characters on his keyboard.

      • Well said- I get it. Financing is a great tool and I agree it can be used effectively. But it should in my opinion be used when there is no other option. I guess I am DUMB- but how is owning a property free and clear DUMB? All the rents minus property taxes and insurance and maint- costs goes right into the investors pockets- not some lenders, and then the investor can use that capitol to buy more real state using his own money- I guess I still do not see the logic that some believe. I have brand new duplex units that rent for 1.300.00 ea side. property taxes and insurance and maint- are 300.00 a month tops. A thousand dollar return on ea unit equals a good return if you ask me. I don’t know any other invest besides maybe a high risk stock in the Stock Market Casino where you could get those returns.

        • Catherine Coy on

          Dennis wrote: I guess I am DUMB- but how is owning a property free and clear DUMB?

          If ROI [return on investment] isn’t important to you, why not invest in an asset not nearly as complex as real estate? My goodness, you could invest in dividend-paying stocks from the comfort of your easy chair and get a higher ROI.

          Were it not for the ROI of real estate, I wouldn’t bother investing in it.

        • Lets see- I have 250,000 invested for a single duplex- including the Land- plus these units have appreciated to 400.000 each duplex in the last three years. Don’t know the actual ROI, but I am happy with the results.

  27. Catherine Coy on

    Dennis wrote: I have brand new duplex units that rent for 1.300.00 ea side. property taxes and insurance and maint- are 300.00 a month tops. A thousand dollar return on ea unit equals a good return if you ask me.

    I meant to ask, what is your ROI?

  28. John Murray

    The author is correct many aspects of his doctrine. Real estate is not something a newbie should enter without knowledge. That knowledge will spell the difference between success and failure. The new investor must understand leverage and how to use it. Real estate is pay to play, your skin in the game must be commensurate to your risk and experience. I pulled the plug on my W-2 when I had sufficient knowledge as well as capital. Real estate investment is about the tax game and maximizing the money you get to keep, that is a great starting point for any newbie investor. The rest of the newbie’s knowledge must come form the school of hard knocks. I have a Masters in the school of hard knocks and I’m working on my PhD.

  29. Michael Kay

    Engelo your quite unprofessional in my opinion. Very difficult to take someone seriously that trashes commenters and laughs at every half the posts disagreeing with yourself. Makes BP look a lot more snake oily when you dont have a discussion but just tout what is very clearly an opinion, as the only way to do things.

    Plenty of people have gotten very wealthy using leverage, and to dismiss it is just plain silly. That doesn’t mean they are using the optimal path in every situation, but your goal should be to discuss and help optimize people’s mindsets and methods rather than to just black and white say something like “I dont believe in leverage” etc etc…..

    • Engelo Rumora

      Thanks Michael,

      I appreciate your comment but it seems that you are also on the “leverage wagon” thus your comment is very bias and solely addressing my “unprofessionalism”.

      Once again and as I mentioned to Catherine, I trashed the commentators that trashed me and my method of only using cash.

      I don’t like sitting back and taking it from keyboard cowboy trolls that are too unsophisticated to even upload a profile picture.

      Plenty of people have gotten wealthy using cash and to argue it and troll on this blog is also just plain silly 🙂

      The video is almost 10min long and is backed by a written blog so if you’re finding it difficult to find enough content/help from that, then their could be a perception problem on your side.

      The feedback and reviews in the 80+ comments above are mixed and that was my intention when putting the content together.

      An passionate opinion and different perspective to the status quo.

      I like keeping things civil but won’t take S#$% from anyone.

      Much success

  30. Corbin Wafford


    I would be interested in hearing you thoughts on “house-hacking”.

    It was my intention on breaking into real estate by using an FHA loan to purchase a du/tri/or quad-plex in order to significantly alleviate/eliminate my current living expense (rent) by having tenants pay my mortgage, allowing me to save at an exponential rate and then 1-2 years later, focus more on a buy-hold/flip business when I have enough capital saved up.

    • Engelo Rumora

      Thanks Corbin,

      I think it’s a decent strategy especially if you’re market has an upside for growth.

      Personally, I have always opted to rent crappy little properties and put all of my money into investments.

      Do your best to make your “house hack” purchase a positive cashflow investment.

      Thanks again and much success

      • My final comments to this conversation and to ( Engelo ) I admire your courage to fight with folks who love the Trick without the work concept But I can assure you that the Idea of leverage is so strong- you will never convince that mind frame to think any different. It will be like fishing in a cesspool- all you will catch is a bunch of Shit. I would give you one caution however- Don’t put yourself on the defensive. the truth speaks for is self. My father once told me a very simple concept. The minute you stop trying to impress people is the moment you start to get ahead. Yea its great at a cocktail party to boast of your mega rentals but in fact if you don’t own the-property they belong to someone other than you.

        • Engelo Rumora


          Love your comment mate

          It was a fun ride and I’m glad the topic took off (104 comments including this one lol)

          I usually don’t get into back and forth banters like this but I must admit it was fun being a keyboard cowboy for a bit just to see how people react.

          Catch you on the next blog.

          ps. I think my next one is “Why You Should Only Use Leverage To Invest” haha

    • Catherine Coy on

      Corbin, your plan is sound and, in fact, perfectly illustrates what others are saying about the power of leverage in real estate investing. Why NOT have your tenants pay your mortgage? How long would it take for you to save the money needed to buy the 2-4 units outright? Surely a LOT longer than using leverage to buy the units, save the discretionary your plan provides and pay cash on other investment properties.

      Engelo wrote: I trashed the commentators that trashed […] my method of only using cash.

      Engelo, what is your ROI on the first property you bought for all cash?

      • Engelo Rumora

        Thanks Catherine,

        It was while back.

        I bought a D class property (I didn’t know any better) in Kansas City for $9,000 and spent $4,000 in rehab.

        Rented it out for 2 years and for $600pm and had 1 turnover.

        I sold it for around $29,000 or so (Can’t remember the exact sale price off the top of my head lol).

        All in all it was a very solid return over the 2 years and the exit was pretty good also.

        I wouldn’t invest in that asset class again as it’s very volatile.

        Thanks again

        • Catherine Coy on

          Engelo wrote: I bought a D class property (I didn’t know any better) in Kansas City for $9,000 and spent $4,000 in rehab.

          Now we’re getting somewhere. When did this take place–in the 1950s?! (Just kidding.) Actually, this is the strategy espoused by Larry Goins. He buys houses all over the country at this price point; then makes the properties available using seller financing to first time homebuyers in that price range. He has the know-how to buy them and consumers buy them from him using owner financing. In so doing, he has developed a stream of income on houses he doesn’t even own.

          Realistically, however, we’re talking buying for cash in the hundreds of thousands, not tens of thousands, if you want to buy in A-B class neighborhoods.

        • Engelo Rumora

          Thanks Catherine,

          Here is another example of a deal I’m considering.

          An 8 unit that is completely derelict and located in a B- area (It’s a historical district that is currently gentrifying)

          Purchase will be around $20,000 (Yes, not a joke)

          Rehab will be $100,000 and maybe even a bit more.

          Gross rent at full occupancy will be $60,000 per year (Very conservative estimate)

          Let’s just say that expenses will be 50% of gross rent, so $30,000 approx.

          Leaving a net rent of $30,000 and a net cap rate of around 25% (total cash outlay of $120,000)

          The property will also be worth $250,000+ all day long.

          Not bragging here but these are the types of properties we can buy all day long in the Midwest.

          Cash truly is King here as this property is so derelict that no one would touch it.

          Some courage, a vision and cash makes the deal happen.

        • Catherine Coy on


          EVERYONE knows “cash is king.” EVERYONE on the planet. But most real estate investor wanna-be’s (a) don’t live in the Midwest; (b) don’t want to move to the Midwest and (c) don’t want to renovate an apartment building on the off chance that the area will be “gentrified” by the time they’re done with the renovations. What’s “courageous” about investing in da hood in hopes that the area will gentrify? What’s “visionary” about buying a beat up apartment building and making it habitable in a soon-to-be gentrified neighborhood? Everyone would do that if we could see into the future. Here I thought you were onto something unique. Sounds risky to me. Pfffft!

        • Engelo Rumora

          Thanks Catherine,

          It sucks for those that don’t want to invest in the Midwest as this market truly feels like being a kid in a candy store.

          There are “candy deals” falling from the skies lol

          “In da hood”

          I didn’t know that’s how da saying goes 🙂

          The area has already gentrified with white collar folks buying up historic homes and paying top dollar. The area is on the outskirts of Downtown where the biggest and richest employer is redeveloping a large portion of the waterfront marina.

          This deal will get me a step closer to doing close to 500 deals now in only 6 short years so I know very well what risk is and I take risks every day.

          “Risk” is one of the main reasons as to why I am where I am today.

          It was a pleasure conversing with you and I hope to catch you on one of my next blogs.

          Much success with your investing

  31. Jerome Kaidor

    Here in the San Francisco Bay Area, loans are pretty much a fact of life. Otherwise, you don’t save up $50K for that first investment – you save up more like $600K. We bought our first fourplex in 1996 for $350K with $60K down.

    If I’d had to save up $350K instead of $60K, it just wouldn’t have happened. Every single property since then has
    been bought with a loan.

  32. Christopher Smith

    Hello Engelo
    Most of my properties are in CA Far East Bay, but I have a couple of properties in Ohio between Dayton and Cincinnati (Springboro-Centerville area). I have a manager there who does all of my stuff. I’m continuing to look in that area (perhaps also Columbus) for additional properties for cash acquisitions. If you are working that area I’d be potentially interested. I typically go with good newer properties in very good neighborhoods.

  33. Wade G.

    I may have missed the point to this blog but waiting until you can pay cash for a property is a huge waist of time. I hope everyone on this site understands the cash on cash difference between a leveraged property versus a paid in full property. Without leverage I see no reason why someone would want the hassle of real estate, may as well invest in an IRA or something, or maybe just invest in a REIT if you want some sort of real estate exposure…much less hassle.

    I do agree that this is not a something for nothing game. It generally takes some money to make money. I see nothing wrong with leverage as long as one has ample reserves. Ample reserves removes much of the risk with leverage. Also, the properties should have been bought way below retail value anyway.

    Another aspect is asset protection. While I am sure we can all agree that proper management, insurance, and an umbrella policy will protect most small time investors (most small investors don’t hold properties in a LLC). There is still the possibility of lawsuits. If you are sued for some reason your paid in full property is going to look very enticing to an attorney, on the other hand, your property at 75% LTV is not quite as attractive. If given the choice I would rather have 20k or so at risk in the leveraged property rather than a 100k or so at risk, that I saved years and years to acquire, in the paid in full property.

    Having said all of the above perhaps one day when I get much older and want to downsize and make my life less complicated, perhaps I will agree that having paid in full properties may be a good option. Don’t know but in the earning years I need my money to work as hard as possible and paying cash for properties aint gonna to cut it.

  34. Kurt F.


    Thanks for your thoughts — a great article. Really, a kick in the *** many of us need.

    Given your position on saving money, debt, financing, etc., what are your thoughts regarding most of the Bigger Pockets webinars — BRRRR strategy, etc?

    Having listened to several webinars, there seems to be a continuing emphasis on heavy leverage to get into a purchase, and then compounding it with many consecutive deals done quickly. Which, doesn’t seem to fit your business model / outlook.

    • Catherine Coy on

      What’s curious to me is that Engelo claims to have done 500 units in a relatively short period of time. How could he have done that with all cash? Maybe he means the money wasn’t HIS cash, but OPM, which is another strategy entirely.

      • John Murray

        The moral of the authors story If you read into it is to find your wheelhouse (there are many in real estate) the investor needs money, knowledge, drive and hard work. Most of us are risk takers and work really hard that actually do this full time. To pick apart and insult the author’s character says to me the individual is a wanna be and not even a newbie. Learning from those of us that have actually a successful wheelhouse is a smart thing to do and that individual will be successful. Learn nothing and that individual will not be successful in real estate and just follow the W-2 path and rent from us that are successful.

        • Engelo Rumora

          Thanks for your comment John,

          I appreciate your kind words and am super glad that you understood the message which in my opinion was very clear from the start.

          Much success and I’m looking forward to seeing further comments from you.

        • Catherine Coy on

          Engelo wrote: Much success and I’m looking forward to seeing further comments from you.

          But be careful, Dennis. If you disagree with Engelo, you’ll get F-bombs–disguised, of course–in response.

    • Engelo Rumora

      Thanks Kurt,

      I do my best with kick up the A$$ blogs lol

      Real estate is “hard yakka” as we say in Australia and many folks need a wake up call to the hard work.

      A strategy that I suggest would be to buy, renovate and sell.

      Do that 4-5 times and then hold one property (If your cash position allows it)

      Money makes money so you want to stay as liquid as possible, doing deals non stop and only holding when you have “lazy money” lying around.

      Never jeopardize your “doing deal” momentum with buying and holding

      Once you reach a certain level of liquid capital and that amount allows you to park it all in buy and hold real estate and live happily ever after.

      Only should you then tie up the money.

      Just my opinion


  35. Great Point- Engelo- Folks stay on point here. Even Engelo agrees with using leverage at times- but as he says only for the seasoned professional who when they see a real deal- do what they have to secure it. But the article was written for Newbies who do not have the years of experience- thats what I kept seeing in his article , advise for the beginner not the pro.

    • Catherine Coy on


      He does? I didn’t read that particular caveat. I think Engelo got off track when someone disagreed with him and he resorted to vulgar comments using special characters on his keyboard. Very unprofessional, in my opinion.

      • Catherine: On Engelo’s July 17- 5:16 am reply to Dennis- he says after using your own resources- ( then consider financing at a later date ). In his main article under BUYING- FIXING- &FLIPPING- Engelo said something to effect – use your own money until you know what you are doing- then super charge your efforts by using someone eles’s money. I never got the impression that he was against financing- His message is to the beginner- He wants to instill in them a right to play at the real state table by bring their own table stakes to buy in the game. I am sorry you two butted heads. But I believe he is doing alot of newbies a favor by being honest enough to tell them the truth. This is probably a bad analogy- but here we go- Its 1850 and I am loading my family in a wagon on the East coast- headin for Oregon Territory- I have an extra team of oxen- an extra wheel- plenty of extra food and amo- I have prepared for this journey for years- gone over my list of supplies for months and now I am hitten the trail. The guy next to me in the wagon train has the same dream in his head- he is super excited to go. but he is poorly funded- his team looks worn out- hardly any food or warm clothing in his wagon. I ask him- What are planning to eat- Oh he says- I will eat praire chickens and stuff. Who you do you think will have the best chance of reaching Oregon?

        • Catherine Coy on

          Dennis wrote: Engelo said something to the effect – use your own money until you know what you are doing- then super charge your efforts by using someone else’s money.

          Seems to me just the opposite would be a better tack. Money is money. If you buy the property correctly, you should go for it–borrow or pay cash.

          BTW, Engelo was the first to drop F-bombs in the response thread using special keyboard characters. That’s the only way he could get his vulgar responses past the moderator.

    • Engelo Rumora

      Thanks for your support and replies Dennis,

      Catherine is clearly super ignorant to the above comments made against me and my blog.

      I responded with fire to fire as can be seen further above in the comment trail.

      The folks that commented in a civil and respectful way even tho they disagreed, got a civil and respectful reply from me.

      I am forced to simply ignore her comments as she is seems to be on a witch hunt without offering any value to the reader.

      Thanks again for your support mate

      • Catherine Coy on

        Engelo wrote: I am forced to simply ignore her comments as she is seems to be on a witch hunt without offering any value to the reader.

        That’s YOUR opinion, of course. Several participants in this blog response thread disagreed with you, nearly all of them respectfully. Several were surprised by your harsh and vulgar responses. I leave it to the moderator to judge whether your blog contribution is simply full of “fire” or unbecoming of this forum.

        • Engelo Rumora

          Thanks Catherine,

          You obviously didn’t read the other participants comments above.

          if you did, you would have noticed that quite a few where not respectful in their replies.

          The moderators and myself exchanged a few very pro-active emails regarding how to respond/not respond to folks just trolling a blog.

          You clearly have no intentions of offering any value to the reader here but rather just personally attack me with every comment.

          Not sure what your obsessions is but I’m assuming that you’re a reputable and busy real estate professional so wouldn’t you have other things to do?

          Thanks and we can continue this discussion on my next blog coming out this weekend.

          Have a great day

  36. Alf Penland

    I think the main take away here is that if you can’t save up $50,000 (or whatever your target), you haven’t gotten your lifestyle and personal spending under control enough to start investing.

    I believe this video is pointed to new investors or people who have never invested in real estate at all and are trying to get started. If you are deep in debt, are spending more money than you make, or are looking for a way to make quick cash while bleeding out expenses, this video applies in spades.

    The point is, get your own financial life, and more importantly, LIFESTYLE in order before jumping off the deep end.

    • Great comment ALF- I agree- Like I have posted- The authors admonition to Newbies is be prepared. Its like going to Vegas and you have to play at the $100.00 min blackjack table. If you only have $500.00- its going to be a short night for you unless you have incredible luck. bringing $5000.00 to the game shows you have the money to set their awhile and wait for the odds to change. We all know- no body can always pay cash- but for the beginner- he had better have some with him or her because they don,t know the game yet. You buy a new property- and two months later the AC unit dies and the Service tech says you need a new compressor- $2.500.00, so its either pay cash or put it on a credit card.

  37. Liwen Gu

    Hi Engelo, I enjoyed reading your article. Although I’ve never done a all cash deal, I’ve put a significant downpayment on my rental properties (much more than 50k) to reduce my monthly mortgage payments and increase my cashflow. I don’t have any experience flipping a home which I would really like to try. It seems like some people here are hung up on being able to save $50k. My problem isn’t about saving $50k, I don’t think that’s the hard part. My question is, what do you do with the 50k once you’ve saved up? I suppose you could find a fixer upper for 30k, put 20k of work into it and then flip it…I’ve never lived in a place where housing is so low though. I guess that could work if I lived in places like Detroit, Indy, TN, etc. but I don’t see how that’s going to work in other places without leverage. I don’t think flipping out of state is a good idea, do you have any advice for investors who live in states with more expensive market? Saving $200k cash would a lot harder than $50k!

    • Engelo Rumora

      Thanks Liwen,

      It comes down to how bad you want it 🙂

      For example, I moved from amazingly beautiful Sydney, Australia to Toledo, Ohio.

      I couldn’t make the numbers or my long term goals work in Australia.

      Fast forward 5 years and I unofficially retired last year at the “old” age of 29, having done over 400 flips, generating millions in revenue.

      It all comes down to choices, sacrifice and hard work.

      Much success

        • Engelo Rumora

          Thanks for your comment Catherine,

          Maybe you should try something other than selling mortgages and you could also retire sooner.

          I hope that trolling this blog on why investors shouldn’t finance has helped you gain more clients.

          I do these blogs to assist others so maybe you also found some use from it also 🙂

          Have a great weekend

      • Adam D.

        I wouldn’t call anyone “retired” until they had the opportunity to sit on the couch every day, (all day) and eat whatever wonderful food they wanted. Filet mignon, caviar, or just a tuna sandwich like me. But anyway, I hope you have enough passive income to be able to live comfortably for the rest of your probably 50-60 years. If not, then you’ve not retired but rather bought yourself another job. Maybe you like this job more than others in the past and that’s great, but if you can’t turn your phone off and go camping or skiing, or swimming, or cruising for 3 months at a time, you’re not really “retired.”

        • Catherine Coy

          You nailed it, Adam.

          In fact, people who renovate and flip aren’t really “investing.” They’re merely buying low and selling high after they’ve arranged for themselves a construction job. They could do the same thing with old cars.

          The component that sets real estate apart from all other forms of building wealth is the ability to wield the powerful tool of leverage–which tool Engelo seems not to fully understand.

  38. Engelo Rumora

    Hi Catherine,

    Internet Troll

    In Internet slang, a troll (/?tro?l/, /?tr?l/) is a person who sows discord on the Internet by starting quarrels or upsetting people, by posting inflammatory,[1] extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the intent of provoking readers into an emotional response[2] or of otherwise disrupting normal, on-topic discussion,[3] often for the troll’s amusement.

    I’m not sure what your obsession is with me (I know I’m a good looking guy but I’m already taken. Sorry) or this blog that you keep coming back, but it is evident that you are not here to assist others but rather personally attack me with your numerous comments (as can be seen above) and counter to every comment I make.

    Would you mind sharing what are your intentions here and what are you looking for?


    • Catherine Coy

      You’re just mad that I haven’t slathered praise all over you. I’m not the only one in this thread who doesn’t agree that your methodology is the only–or even the best–way to create wealth in real estate. I don’t believe that, by age 29, you’ve flipped 400 properties and “made millions.” I just don’t believe your claim. So cut and paste accusations of “troll” all you want. I’m not buyin’ your story.

      • Engelo Rumora

        Thanks for your comment Catherine,

        Yet again, you are not helping anyone looking for guidance.

        You are, once again personally attacking me and thus “trolling” as a quick Google search revealed above.

        I’m not here to sell my story to you or anyone and am happy just offering my perceptions, opinions and experiences.

        I’ll repeat the same questions as I did in my comment above to you:

        Would you mind sharing what are your intentions here and what are you looking for?


        • Kevin Sapp


          Catherine, if ya don’t believe him, look him up. Part of being a real estate investor is understand how to research property. Research property and determine if he has done it or not. He has a fairly unique name and you know where invests..

          Some healthy scepticism is good, I will say, however, I fund transactions for a 29ish year old that is in the ballpark range that is mentioned here. So it is not impossible.

          In my real estate transactions I run into posers all the time, I’m a lender, everybody wants money and has a story. When I hear one that is, unbelievable, I tell them no, why and that’s it.

          Ask @Ben Leybovich, it’s pretty sad that I’m the voice of reason.


  39. Adam D.

    TOTAL GARBAGE! Engelo, normally I’m with you on your vlogs but this is absolute trash!
    The best way to start is with a low money down loan on a 2, 3, or 4 plex where you live in one unit and rent the others out. My wife and I did it. My parents did the same thing. My Paternal and Maternal grandparents did the same thing. If we can make it happen in 3 generations of landlords, this is the best way to go hands down.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here