How To Borrow Money From The Bank To Get Started?

Question

Hi, for a newbie who just starting out, no job, no house, no asset, not much cash in pocket... I would like to know how the other guys who started out in this kinda situation make it?

Any experience to share?  :cry:

Tom NA · Answer

Wow - that's a great post and great perspective Ryan!  I couldn't agree with you more that it seems people gravitate to REI (and this and other websites) because they think of it as a way to make easy money, and that's the answer to life's problems.  Indeed, determine if you have a passion for it before building up debt and mortgaging your future.  As I've said before, for me personally, I very much enjoy my full time job and this is just a hobby and investment diversification strategy.  Even if I could make ten times in REI what I make in my job, I wouldn't make the switch because it's less about the money and more about day-to-day satisfaction.  Too many people seem to ask "I want to get into Real Estate, where should I focus?" which I translate into "I don't have any idea what I might like, if anything, but I don't care because I've heard there's lots of money to be made in Real Estate which will obviously make me happy".  If your passion is *Making Money*, my suspicion is that you will flounder and most likely fail as you'll put out the minimum effort to get there.  If your passion is *Real Estate*, I think you are much more likely to succeed as you will be more likely to pour your full heart and energy into it.

Account Closed · Answer

I have read this thread and worry about maybe hijacking it here. But it talks about potentially finding funding to start when you have nothing. Let me start by saying if you have solid credit, get a business filed, and get credit started in the business right away. Initially many places will check your credit to approve credit for the company. So while the credit is solid, do this!

As to the comments about leaving your job or doing what you want, let me just take a few moments (this will be longer than my usual posts) to ponder this with you. I have several students/proteges that I discuss this with so I am going to share some of my statements to them with you now. Let me preface this in saying that I am not giving you everything I tell them, as it wouldn't be fair to the investment they have made with me to share that information completely.

Real estate investing is something that can provide much of what you are looking for in life.  It can provide freedom, time, a good income, purpose, and satisfaction.  If real estate investing is done the wrong way, it simply becomes another job that you hate. The purpose of this plan is to teach you how to do real estate investing the right way so that you’ll be pleased to eliminate your job and become a full-time real estate investor, not how to replace the job you have right now with real estate investing, which you may come to dislike as well.

There is a myth that many people believe that if you have a ton of money and no job, you are living the good life.  From my experience, and there are many people who can attest to this as well, having a lot of money is not necessarily the good life.  There are many people who can tell you that not having a job is not necessarily the good life either.  Sometimes you can be as bored without a job as you can be with a job.  On many occasions I have tried to slow down my real estate investing business so that I can really enjoy life and basically do nothing.  However, when I sit or slow down, I end up bored and end up taking on more work.  Because real estate investing is something that I enjoy doing and find satisfaction and purpose, I find myself doing more deals to fill my time.  Most people need to fill their time and are going to do so with some type of work.  But the key is to fill it with the type of work that YOU want to do.  It’s important to end up doing something that you want to do.  If you’re reading this, I assume that real estate investing is something that interests you and, when done the right way, is something that will fulfill your financial needs and be satisfying and purposeful.

Money is something that people believe will make life good.  This is the myth of money.  Having made a good deal of money myself, while certainly not being the wealthiest of people, I can attest to the fact that making a lot of money is not going to make you happy.  The same issues I had in my life prior to having money are still there.  The same types of struggles are still there.  If anything, money can create more stress in your life.  Having a lot of money requires you to do things that people without a lot of money don’t need to do.  When you upgrade your lifestyle, you normally get a bigger home and more assets and have to protect those assets.  This often includes worrying about estate planning, dealing with asset protection and insurance and handling more complicated taxes.  When you have more money you begin to take on more responsibilities.  You also have to spend more time truly evaluating people and their motivations for being around you. Money itself is not going to make you happy or buy happiness.  Money just makes it easier to write more checks.

When developing your PLAN, and you must develop a plan, to leave your job and go full-time at whatever you desire to do, you must look at a couple of things. There are two key things to give serious consideration to.  First, you need to evaluate your needs.  You need to know how much income you absolutely, positively need to make.  These are not your desires or how much you need to go on vacation, but what you need to make ends meet.  This is the bottom line number that you need every month to pay your bills.  Develop your monthly budget and determine how much you need to generate each month in order to survive.

This is a start, but I think from this you can understand it is far more serious than to say "Rack up Debt" on your credit cards while hoping you actually like what this business has to offer. What if you do not enjoy "flying solo" or real estate? Then you return to get a job and not have ton of credit card debt.

Jason Hanson · Answer

You don't need much money or any credit to get started. Start out wholesaling so you make some quick cash. With wholesaling you are playing "match maker" and making 5k to 10k in the middle.

For the money you do need, have the guts to put it on credit cards. Many real estate empires started on credit cards and the beauty of this country is that anyone can get a credit card.

Just be smart and use it for business, and not like other idiots who go out and buy flat screen tv's, etc.

Chris Pelletier · Answer

Thanks Tim,

I guess 2 years is a realistic goal for me considering I will be doing this part time.  The good news is, my wife is on board, we are working together to reach our goals.

Timothy W. · Answer

No problem.  Were I to do it again I would have created an entire year's living expenses in whatever the "money" of the time was.  Like in today's market - a year's living expenses in commodities.  You're lucky for spousal support.  People underestimate the importance of this.  Be ready for a little bit of marital strain but stay focused on the team effort of reaching the goal and you'll get there.

Timothy W. · Answer

Chris it took me about a year to get anything resembling a decent income.  I now make more than I ever made at any job and don't have a mortgage so it's certainly nicer...lol.  But I'm still quite a ways short of my yearly "cash" goal.

Kyle Gregory · Answer

chris why not just jump into while you are working full time.. and when the time comes that you can afford to retire on the rental/rehab/flipping business you can just go ahead and do that?

Chris Pelletier · Answer

Tim,

How long ago was that and how are you doing today?  The reason I ask...I have a full time job and excellent credit.  I want to do this full time.  In 2 years I can retire (at age 36 not bad) however I won't be able to collect my pension until I am 55.  I really want to try something different and this is the route I want to take.  I know it won't be easy, I want to purchase some rental properties over the next 2 years and perhaps rehab a few (needs to be a great deal in the current economy).  I am also about to take a class in wholesaling.  I know it won't be glamorous but being in control of my life is what attracts me.  I am sooooo sick of having a boss and my damn alarm clock!  :lol:

Timothy W. · Answer

I actually was able to do this.  I had no money, terrible credit, not job and was able to get a real estate business started and running.  But let me tell you something about the first year....IT SUCKS!!!  IT SUCKS SUCKS SUCKS!!!  Imagine not eating for a day because you had to spend what little money you had available on caulk.  Get to know beans very well.  $1 spent on dried beans will provide the sustenance you need for almost 2 days.  That's 50 cents a day.  Welcome to the glamourous life of full time real estate investing.

Now I ended up not getting a "job".  What I ended up doing was becoming basically self employed in the rehab business to feed me with something a little nicer than beans and to pay little luxuries like utility bills.  You need something to make you cash while you invest in real estate.  There is no way around this.

Tim

Michael Rossi · Answer

I would strongly suggest getting a job.  That's priority number one so that you have some income to cover your bills.  There are 168 hours in a week, that's plenty of time to work a full time job and still have 3/4 of the week left over for real estate investing.  If your credit is bad, then I would suggest getting TWO full time jobs so that you can pay your bills off and build up some cash.  Even with two full time jobs, you'll still have over half the week left over for sleep and real estate.

Contrary to all the silly guru nonsense out there, you can NOT run a successful real estate business with no money, bad (or no credit), and no job.  Without money, credit, and a source of income, your probability of FAILURE in real estate investing is ASTRONOMICAL!

Good Luck,

Mike