One of the most common questions that people ask me is how can they start investing in Real Estate with no money. I wish there was a strategy that takes no money and some do but you still need working capital for different things. This forum is for the purpose of giving people some options and hopefully hearing from other community members about other options! I started investing when I was 19 years old and have bought multiple properties since then. If you are a person with low capital but eager to invest in real estate here are some options I would personally recommend and I would love to hear what other people suggest!
-House-hacking: You could buy a property with down payment assistant and do different types of house-hacking. Renting by the rooms and having other people pay the mortgage. Save for a year and then primary flip. Depending on your market buying a duplex might be feasible but many down payment assistance programs do not offer credit for multi-families.
-Wholesaling: You could get your feet wet and get to know how to source deals through wholesaling. It's not technically investing but it can help you increase your savings.
-Finding private money: If you can find a very good deal then connect with a family member or friend that could lend you what you need for a hard money loan or to lend you the full amount. If you are using a hard money loan you just need 20% down. If you are having someone finance the entire project you can offer wither interest or equity. Interest it's always cheaper but when you are starting people will be more interested in getting equity in your deal. It's hard to have private money for a holding property. Usually you can lend for flips and builds.
I'm not a fan of wholesaling when you have no money. However, I am a fan of ethical wholesaling. Wholesaling is a great option to diversify your toolkit of potential deal exits if you are an experienced investor, but I think you should always have the ability to flip the deal but decide to wholesale due to some other limiting constraints (e.g., not enough contractors, bandwidth, etc.). By getting a wholesale deal under contract, you are often times getting a seller out of a tricky situation. Maybe they are behind on their mortgage payments; maybe the bank is taking the house in a few weeks, or maybe they have to get a lump sum of money in a few weeks to settle a lawsuit. Whatever it may be, as a wholesaler with no intent to close on the deal yourself, you promise to solve the seller's problems while trying to assign your contract to a buyer without knowing what flippers are looking for, if the numbers work. If there are no buyers, you cannot fulfill your promise to the seller. You waste their time when they could've found a legitimate buyer. This puts the seller in a much worse situation than they started, and this burns a lot of people. This is why most people do not trust wholesalers. Most ethical wholesalers don't have the bandwidth to flip the deal and would rather just assign the contract to another investor in their network. If they are unable to assign, they can buy the deal themselves and still turn a profit.
I'm not a fan of wholesaling when you have no money. However, I am a fan of ethical wholesaling. Wholesaling is a great option to diversify your toolkit of potential deal exits if you are an experienced investor, but I think you should always have the ability to flip the deal but decide to wholesale due to some other limiting constraints (e.g., not enough contractors, bandwidth, etc.). By getting a wholesale deal under contract, you are often times getting a seller out of a tricky situation. Maybe they are behind on their mortgage payments; maybe the bank is taking the house in a few weeks, or maybe they have to get a lump sum of money in a few weeks to settle a lawsuit. Whatever it may be, as a wholesaler with no intent to close on the deal yourself, you promise to solve the seller's problems while trying to assign your contract to a buyer without knowing what flippers are looking for, if the numbers work. If there are no buyers, you cannot fulfill your promise to the seller. You waste their time when they could've found a legitimate buyer. This puts the seller in a much worse situation than they started, and this burns a lot of people. This is why most people do not trust wholesalers. Most ethical wholesalers don't have the bandwidth to flip the deal and would rather just assign the contract to another investor in their network. If they are unable to assign, they can buy the deal themselves and still turn a profit.
I am just starting out myself and I find that wholesaling is harder than I thought. I have foreclosure lists and I have been doing ALOT of door knocking. I have heard many people say that I will get alot of "No's" before I get a yes. It has been very frustrating, but I am determined to keep going.
I'm not a fan of wholesaling when you have no money. However, I am a fan of ethical wholesaling. Wholesaling is a great option to diversify your toolkit of potential deal exits if you are an experienced investor, but I think you should always have the ability to flip the deal but decide to wholesale due to some other limiting constraints (e.g., not enough contractors, bandwidth, etc.). By getting a wholesale deal under contract, you are often times getting a seller out of a tricky situation. Maybe they are behind on their mortgage payments; maybe the bank is taking the house in a few weeks, or maybe they have to get a lump sum of money in a few weeks to settle a lawsuit. Whatever it may be, as a wholesaler with no intent to close on the deal yourself, you promise to solve the seller's problems while trying to assign your contract to a buyer without knowing what flippers are looking for, if the numbers work. If there are no buyers, you cannot fulfill your promise to the seller. You waste their time when they could've found a legitimate buyer. This puts the seller in a much worse situation than they started, and this burns a lot of people. This is why most people do not trust wholesalers. Most ethical wholesalers don't have the bandwidth to flip the deal and would rather just assign the contract to another investor in their network. If they are unable to assign, they can buy the deal themselves and still turn a profit.
I agree! Wholesaling is a very tough business and there are people out there that give it a very bad rep. There is ethical wholesaling though. One of my first deals that was life-changing for me what wholesaling a for sale by owner house. He knew I was re-selling it to my buyers and was ok with it as long as he got his asking. We closed in a week with no problem and he has referred me other family members. There is a way to do things. The point of this post was to give options. Would love to hear if you have any other strategies that you suggest.
I personally love house hacking, as it is a great way to reduce your largest expense, get into a property with some of the best financing vehicles available, and also sharpen your land lording skills.
Haven't tried wholesaling but I know some guys in it, and I definitely wouldn't want to compete with them.
I am just starting out myself and I find that wholesaling is harder than I thought. I have foreclosure lists and I have been doing ALOT of door knocking. I have heard many people say that I will get alot of "No's" before I get a yes. It has been very frustrating, but I am determined to keep going.
Definitely tough starting out! I do expired listing calls for one of the agents in the Charlotte area and do a finders fee if they decide to relist, but I have the opportunity first to buy it. In the first 3 weeks, I'm buying my second house to flip on hard money and I have one that the agent list on the market for a client looking to relist.
It's all about being creative! Listenign to some of Pace Morby's talks can get your mind thinking!
@Angie Castro Totally recommend house hacking in some form or fashion. I “house hacked” 2 bed and breakfasts for 24 years. My living expenses were almost completely rolled into the business model and I lived among an ever changing group of guests who made life lively and entertaining.
This would work for many different business models that have an owners quarters such as some storage facilities or car washes.
In planning to sell the final bed and breakfast 5 years ago I bought a duplex. I have been house hacking it ever since. It doesn’t pay for all my expenses but pays for the taxes and sewer and water and utilities. At the end of the year we also take a distribution from the funds left in the account.
If my partner wasn’t so risk adverse and opposed to moving I would buy a new property and house hack it every 14 months or so when the seasoning period on the previous 3.5% down payment loan was up.
It’s a great way to grow your portfolio.
I am just starting out myself and I find that wholesaling is harder than I thought. I have foreclosure lists and I have been doing ALOT of door knocking. I have heard many people say that I will get alot of "No's" before I get a yes. It has been very frustrating, but I am determined to keep going.
Definitely tough starting out! I do expired listing calls for one of the agents in the Charlotte area and do a finders fee if they decide to relist, but I have the opportunity first to buy it. In the first 3 weeks, I'm buying my second house to flip on hard money and I have one that the agent list on the market for a client looking to relist.
It's all about being creative! Listenign to some of Pace Morby's talks can get your mind thinking!
@Angie Castro Totally recommend house hacking in some form or fashion. I “house hacked” 2 bed and breakfasts for 24 years. My living expenses were almost completely rolled into the business model and I lived among an ever changing group of guests who made life lively and entertaining.
This would work for many different business models that have an owners quarters such as some storage facilities or car washes.
In planning to sell the final bed and breakfast 5 years ago I bought a duplex. I have been house hacking it ever since. It doesn’t pay for all my expenses but pays for the taxes and sewer and water and utilities. At the end of the year we also take a distribution from the funds left in the account.
If my partner wasn’t so risk adverse and opposed to moving I would buy a new property and house hack it every 14 months or so when the seasoning period on the previous 3.5% down payment loan was up.
It’s a great way to grow your portfolio.
Omg Alecia that is so interesting! The bed and breakfast is so cool. We don't hear about those often or as a way to house-hack. I love the way you think. If it was up to me I would be moving once a year!!
I am just starting out myself and I find that wholesaling is harder than I thought. I have foreclosure lists and I have been doing ALOT of door knocking. I have heard many people say that I will get alot of "No's" before I get a yes. It has been very frustrating, but I am determined to keep going.
Definitely tough starting out! I do expired listing calls for one of the agents in the Charlotte area and do a finders fee if they decide to relist, but I have the opportunity first to buy it. In the first 3 weeks, I'm buying my second house to flip on hard money and I have one that the agent list on the market for a client looking to relist.
It's all about being creative! Listenign to some of Pace Morby's talks can get your mind thinking!
I’ve never thought about the expired list. That’s really smart. Would you mind sharing how you determine your finder’s fee?
Will someone brief me on the benefits of house hacking?
House hacking means living in the place you are fixing up or let's say you have a triplex and you live in one unit and rent out the other two.
So, RE has an expense to it and capital is a very, very important but it is not the only variable. But to get going, someone has to pick up the financial responsibility of the downpayment and holding costs.
Hello everyone,
I am a small investor looking to finance my project.
Context: we found couple of good single family lots in a subdivision and also worked with a builder to design a house for us. This is an investment property so my plan is to build it and sell it.
Problem: I talked to a lot of lenders and all of them are suggesting a construction to permanent role but not lending for a investment property.
So would like to know if there are any lenders to finance this project. Any help is appreciated.
Than you
House hacking means living in the place you are fixing up or let's say you have a triplex and you live in one unit and rent out the other two.
So, RE has an expense to it and capital is a very, very important but it is not the only variable. But to get going, someone has to pick up the financial responsibility of the downpayment and holding costs.