I have no cash!

19 Replies

I decided to enter the REI world when I learned about wholesaling. It intrigued me because I could actually afford to take action immediately. I am currently marketing for and talking to motivated sellers but have not yet made a deal. As I studied further into REI buying and holding seems to be a lot more reachable than I thought and is ultimately the path I want to take. I'm almost living pay check to pay check and have about a thousand bucks to my name so even though I qualify for a fha loan I can't even afford the money down after taxes and closing costs.
Is saving money from my job and wholesaling to raise some capitol the only way for me to get a property and generate some cash flow or are there other creative ways to the ball rolling?

@Jesse Conners

From my perspective, yes. Although you will eventually have a chance to use other people's money, as an investor I don't trust anyone with my money unless they have put their own skin in the game. 

In my experience, real estate investing, and investing in general is really part of a larger exercise in personal finance. It's living within your means, it's paying yourself first (meaning your investments), it's learning how to walk against the 'spend to your limit' culture prevalent in the post World War(s) United States. 

If you're looking for some inspiration and education in that area, there are tons of great blogs and podcasts specifically target at personal finance, money management, and saving for investments, travel, or whatever you value. 

I am a big fan of the The Simple DollarGet Rich Slowly. I do not personally know the writers or have any stake in these blogs, for the sake of full disclosure. I just think they have excellent material.

While you are  learning your market inside and out, backwards and forwards to be able to id a 'deal' when it comes up, figure out if your lack of cash is an income problem or a budgeting problem. May be a combination. Not having any money is a symptom of past choices and situations.  Address the problem.  Step away from the car payment, high priced coffee and lunches out.  Save money like your child will die if you can't afford the vaccine.  Change and be rewarded!

thanks @Trevor Ewen I will look for some podcasts related to those topics.

@Steve Vaughan your absolutely right, I have not always been wise with money and recently made the decision of adopting a $450 truck payment. Thank you for the advice and although I've made some poor financial decisions I will tighten up the budget and save for my future investments.

@Jesse Conners

Where in New York are you? I live in Westchester County which was poor and rich

You need to look at your expenses and write them out on a yellow pad what you're spending every month

Just put them in columns such as name, amount, interest-rate, etc

Look seriously at the job and what your future is for advancement

Go down to a good training company like Keller Williams KW  in New York and talk to the broker and show that you're very sincere about learning real estate and you want to study the new agents books and They might even give them to you for free

Try to tell everybody that you want to be really good at real estate and that you don't be working your rear end off

Try to limit your TV intake

Think about tending bar or some other one or two nights a week extra job and put it in a jar

I don't know what you're netting for income every month but 450 a month for a vehicle...wow

Cut expenses, make more money

Good luck

thank you @Brian Gibbons . I'm in Syracuse (Onondaga County). I have a decent job (the best I'll find with my education) and can get all the ot I want. The ultimate goal is to quit someday.  I made a stupid decision when I impulsivly sprung for the new vehicle but what's done is done. All I can do now is manage better now and in the future. I will look into Keller Williams. 

Originally posted by @Jesse Conners :

I decided to enter the REI world when I learned about wholesaling. It intrigued me because I could actually afford to take action immediately. I am currently marketing for and talking to motivated sellers but have not yet made a deal. As I studied further into REI buying and holding seems to be a lot more reachable than I thought and is ultimately the path I want to take. I'm almost living pay check to pay check and have about a thousand bucks to my name so even though I qualify for a fha loan I can't even afford the money down after taxes and closing costs.
Is saving money from my job and wholesaling to raise some capitol the only way for me to get a property and generate some cash flow or are there other creative ways to the ball rolling?

 Hey Jesse,

I would check with the state of NY to see if there are any down payment/closing cost assistance programs available. There are multiple programs here in Nevada based on it being your primary residence, how much money you earn, etc. A quick google search yielded this for NY

http://www.nyshcr.org/Topics/Home/Buyers/SONYMA/DownPaymentAssistanceLoan(DPAL).htm

I can't get BPs silly forum linking to stop cutting the link short of .htm (I'm fairly sure it's 2 guys in some dark room living on Mountain Dew Code Red and Little Caesars pizza that are running this thing) so you'll have to copy and paste it. I didn't read too in depth but it looks like a 0% interest loan for up to 3% of purchase price that can be used for down payment and closing costs. It also looks like as long as you stay in the home for 10 years, the "loan" is forgiven and you make no payments, if you sell the home then you would have to pay back the assistance you received. 

You should definitely do more research on whats available in your area.

Adam

PS. The median auto loan payment in the US is $471 so you're certainly not alone.

@Adam Hershman thanks for the positive insight. There are SONYMA and other related options in my area I was unaware of that I will definitely look into a bit more. Hopefully I get generate some cash flow sooner than later.

Hello Jesse,

Have you looked into contracting a property you find.  If you can attain a buyers list of investors with a list of criterier that they want in a property, then you don't need to use your own money.  In this case you would contract it out to the buyer who has the money, or will get their own loan for a fee.  I have a friend who does this in Orange County, and he does quite well.  

I bought several properties without using any of my own money.  The best properties to buy in my case sceneario is if the owner is moving out of state, getting a divorce, or owns the property in full.  

Good luck.

Melissa

@Jesse Conners

Hello. I read your post. You say you don't have much cash but you are paying $450 a month for your vehicle? If you don't need that vehicle for any specific purpose (such as a work truck) consider getting rid of it. That is over 5K a year in vehicle payments! Ask yourself if you can replace that truck with something that costs about half that price. If so, it would almost be like getting a $200 month raise. 

John Thedford, Real Estate Agent in FL (#BK3098153)
239-200-5600

Hey Jesse,

I live in Syracuse NY. About 2 years ago, I became interested in RE investing. I went to a seminar, spent a couple grand on a "guru" program, and thought they had all the answers. I'm sure some of these programs are good, however, the best way (in my opinion) to build your real estate investing portfolio is to closely review your personal finances and network with successful people. 

Review your finances just as you would an income property. 

  • Income (your job) less Expenses (truck payment, rent, credit card, food, gas, etc.) = Net personal Operating Income aka money you have leftover each month
  • Then think of ways you can increase your income or reduce your expenses or both

I'm reviewing this same example right now. I'm searching for a 2 family house to live in and rent the other side. By doing so, I will reduce my rent expense. If I find the right property, I should be able to eliminate my rent payment and generate $200 per month income. After I will be in a better position to find my next property.

I'm cash poor. But as many people explained above, there are many ways to get where you want to go! 

Let's chat RE here in 'cuse sometime.

Brian

@Jesse Conners
Hey Jesse,
It's awesome you're getting into re!
A few thoughts:
1) I know everyone likes to talk about no money needed, etc, but separate from real estate, you need money just to live. You need to establish an emergency fund so that you don't lose everything over a $5,000 unexpected expense. Do that before you invest.
2) like another person said, ditch the truck and buy a used beater. Pay cash
3) I would take all the ot you can get. Work like an animal like an anj

*work like an animal now so you don't have to when you're 80 years old.
4) I would start bird dogging. You don't have to get something under contract, but if you can find deals, investors (including me! I'm in Syracuse and looking for rehab deals) will pay you a finder's fee. That can add to your stash pretty quick.

Once you have an emergency fund, minimal monthly expenses and something for a downpayment, go for it!

@Trevor Ewen @Steve Vaughan @Brian Gibbons @Brian Murphy @Adam Hershman @John Thedford @Craig Shute

I would like to thank all of you for directing me to really look at my personal finances. I've taken what all of you had to say into serious consideration. I sat down and wrote a budget. Even with the truck payment, after all my other expenses, giving myself $60 per week spending money and working 15 hrs ot (won't be a shortage anytime soon) I can bank $1000 per month. Thanks again for the what should have been obvious eye opener and motivating me to save for my future investments.

Ps. marketing for wholesale deals would come out of that grand I could be banking.. What are your thoughts on that?

Originally posted by @Jesse Conners :

thanks @Trevor Ewen I will look for some podcasts related to those topics.

@Steve Vaughan your absolutely right, I have not always been wise with money and recently made the decision of adopting a $450 truck payment. Thank you for the advice and although I've made some poor financial decisions I will tighten up the budget and save for my future investments.

 You need to read The Millionaire Next Door, then get rid of the truck until you can afford it. 

RIP Tom Stanley, amazing author: http://www.ajc.com/news/news/millionaire-blockbuster-author-dies-in-crash/nkLxS/

@Jesse Conners well done taking a step back and taking a good look at your budget!  Thank you for replying to us, thanking us and updating us on your progress.  That helps motivate us to continue helping others!  Wholesaling can be a great way to generate cash, but it is just about the most advanced and all-encompassing RE skill out there, IMO. You have to be a marketing machine to generate motivated seller leads, you have to know your market to ID a 70% deal, have to know about rehab expenses, know negotiation skills with your sellers and buyers, know different ways to solve the sellers problem, and have a quality buyers list to close quickly.  Not that is can't be done, I just think the skills required are under-estimated. I would take @Brian Gibbons generous offer and PM him. He is the best in the L/O biz. Lease options are awesome and can accomplish what wholesaling can. Thanks again for being an awesome OP! Best wishes and continue to keep us posted!

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