Can it be done?

Question

I have been reading the discussion forums for a awhile and along with all the information that this website provides, it has given me more information than some of the books I have bought 
So first of all I just want to say thank you for all of your contributions and wealth of information.
 My question is how does someone with bad credit and no money really become a successful investor. I read a book about investing without credit or money but in the end I would think that some money would be needed.
 Please be gentle with me if anyone can give me direction on this or just hard cold facts I would be much appreciative

Michael Rossi · Answer

ms_lane35,

It is a guru myth that you can be successful in real estate investing with no money and bad credit.  Yes, there are techniques that will allow you to buy a property no money down.  However, if you buy with no money and bad credit, EVERYTHING must go almost perfect if you are to make money.  It is nearly impossible to run a real estate business with no money and bad credit.  As All Cash suggested, I recommend working hard and paying your bills.  There are 168 hours in a week.  That's plenty of time to work two full time jobs and still have over half the week left.  Successful investors have good credit and at least some money!!!

Good Luck,

Mike

Anthony Sulecki · Answer

Ive paid one couple $10, because I could see them being a pain, other than that, Ive paid zero. I do it based on the people, sometimes.  My entire agreement statement states basically that anything I said outside this agreement does not matter, for a lack of better words. I would never try to impersonate an agent to get a signature, but I will pull a few rabbits out of the hat. Thats a good point though. Ill probably add that the seller understands Im not an agent.

I havent read anywhere that option consideration needs to be satisfied with cash; only that it needs to be satisfied. (in delaware, anyway) To me, that could mean just about anything. They should be specific, with a number, if they expect me to follow that one. If you are worried about it, just pay them for the option, but I wouldnt make it much.

Its kept unilateral, thats for sure. Ill send it over today.

Account Closed · Answer

Tony,

It sounds like you are taking a calculated risk on two fronts.

1. It does not matter what you say in the option agreement. It is technically invalid if you do not pay consideration. If no one challenges the option agreement it does not matter too much.

A related item is the idea that it is non-exclusive. Depending on what you are putting into the agreement it might be a bilateral agreement rather than an option agreement. Options being unilateral.

Again, if it is working and you do not feel you have much exposure you can ignore the legal difference.

2. When you say that you are working for them for free that makes it sounds like you are telling them you are their agent. Non-exclusive agent but still you may be leaving them with the sense that you are working for them.

The state will have an issue if your state licenses agents.

Again, it could be like speeding. Until they pull you over you might have little to worry about.

John Corey

PS. Would you mind sending me a copy given you share it a bit already. I am curious how you have worded the consideration. If you like I can offer my perspective in return. I am not a lawyer so it would just be friendly advice from another investor. Send it by email if you do send it to me. See the button below.

Anthony Sulecki · Answer

Yes, the contracts have been looked at. I dont do lawyers though. 2 told me it was illegal, and one didnt know what he was even doing. (He didnt say that specifically, but he told me he had to "look into it". I never heard back from him.) So its kind of a catch22 because lawyers dont get it, and lawyers become judges, so.......  Im prepared for court, if it does happen though.

Like I said, I have written specifically that consideration has been satisfied by two competent parties entering into this contract, etc. I even have the word "consideration" placed, so as to make it obvious. Ive never had a problem with anyone yet. *knocks on wood*

Being its non exclusive, I tell them its not coming off the market and they can market it as they please, and they are just giving me a shot at selling their home. The, "Im working for you, for free" thing really works well. People love getting stuff for free.....or at least thinking that. I freak out when I get the hardees flyer with a free breakfast sandwich, so I imagine they are feeling good about it too.

The buyer knows its under an option contract only when he signs the purchase and sale agreement, and sees the addendum, which basically states that, along with a few other points. Until then, he understands it is "under contract" and is able to be purchased, if he decides. (Or she) I work with a group of the same buyers repeatedly, so they all know that the homes coming from me are under option contracts, and they do not cross that line.

They do ask me for a copy of my option contract though. I laugh and go cash the check.  :D

Anthony Sulecki · Answer

No money or credit is about the contracts. I work on getting as many homes under option contracts as possible (that need repairs), then I tell my buyers.  Sellers dont seem to mind signing options at all, because they dont mean jack unless you find a buyer. If not, it expires, and you "worked" for free. (Thats what I tell them anyway) Mine is one page, simple wording. Option consideration is taken care of in the wording of the contract, so I pay them zero.

I got 2 signed today. (I scheduled it that way, so I only drive out once) I burned gas to get to both homes, so I spent maybe 10 dollars, round trip. They came from an ad in the paper, which costs me $28 for 2 week periods.

So yea, you need some money to start, but if you do it right, you dont need much. If you wanted to buy homes, you could do it subject to existing mortgages on those homes. To me, its all contracts.

P.S. - You can build a buyers list from craigslist with just a post, everyday.

Account Closed · Answer

Some really good info in your post.

One specific question.

I assume you are offering real consideration and if a judge was to review the option agreement they would feel that real value was offered? Have you had the option contract reviewed to make sure that it really is going to stand up in court?

One more question. Do you sell your position in the option or do you try to keep your purchase details a bit more quiet so the buyer does not see the full details?

John Corey

Minna Reid · Answer

ms lane - wholesaling requires no money or credit. Maybe just enough for an earnest deposit, if the seller requires it. 
And let me tell you, I look for wholesalers all the time - I have yet to talk to one that has a clue. I would happily pay a wholesaler for deals if it made my life easier and I could focus on rehabbing.
But there is a huge shortage (at least in my area) of wholesalers that know what they are doing, never mind what an actual deal is.

Account Closed · Answer

All cash,

You said there are two sides to every deal.

You then said that if you get good terms on a deal you must be getting hosed on price.

Is the opposite true in that case. If you get a good price then you are being hosed on terms?

John Corey

Frank Adams · Answer

Two sides to every deal; PRICE and TERMS.

If you're getting great terms (no down, easy qualify) that just means you're getting HOSED on price.

Best thing is to SET A GOAL, in your boat here's what I'd do:

Quit buying books, the library is FREE, as is this site

Get another and possibly a better job. If you're just watching TV, internet, etc in your "spare" time you're not doing anything constructive. I worked 2 jobs for much of my "productive" lift. Granted a lot of that was roofing, painting, etc on my 16 rentals and some rehabs.

Get a PLAN for getting out of debt and building your savings. I highly recommend Dave Ramsey, for his disciplined approach. As many of his books as have been sold I'm sure there's some at yard sales, ebay, libraries etc.

all cash