starting with $200 or less

23 Replies

Yeah..if 200 bucks is all that you have, I'd save my money and buy some bandit signs..:) Check out supercheapsigns.com (I am in no way affiliated with this company), and order 100 of their large blank signs. Cut them in half and write "Cash For Your House" or "We Buy Houses Cash" with your phone number in dark magic marker. Go down to Home Depot and pick up a few bundles of wooden stakes and some nails. Attach the sign to the stake and put them all over town..:)

Read everything you can on these forums (you'll find a quite a bit of information online for free).

Join a local real estate club and network..ask tons of questions and get out there.

As far as courses go - I personally like Ron Legrand's "Wholesale/Retail" course. You can sometimes pick it up on Ebay pretty cheap.

I read somewhere (I can't remember where tho) about investing in Tax Leins. I am doing a test in Florida with a little over $100.00 (I think $106.35 in total) I might wait 2 years and see what happens then bump up my out flow to more expensive properties with higher tax dues and are more valuable.

Ya..you could try that but with $100 bucks, you're not going to be getting much.

Also, keep in mind. In Florida, you are not purchasing the property, you are purchasing the TAX LEIN. At the auctions, you are bidding down the interest that you're willing to accept when the debtor repays. This is really just a safe way to reinvest your cash if you're already making money. You'll get a good return, higher than a bank will give you. It doesn't create major wealth.

Even if you get it att 12 percent interest, you're not going to get rich with only a hundred bucks..:)

Yeah I know, but like I said this is just a test run for me and 18% interest is nothing to scoff at. Also I am playing on the few persons who don't pay their leins off and I can apply for the tax deed after 2 years and then I control the property. It is something to think about and consider if you don't have much free cash with which to invest.

If you've only got $100 or $200 (or $1,000 for that matter) and bad/no credit, you're kidding yourself if you think you're going to become a successful real estate investor. It is possible to buy a property with none of your own money, but it is nearly impossible to build and operate a business with no money and bad/no credit.

I would strongly suggest that you work hard and build your credit and your cash before you start investing. Don't get caught up in the ridiculous guru hype. You'd be better off putting that entire $100 on lottery tickets than trying to start a real estate investing business with it.

Good Luck,

Mike

Well, he could certainly wholesale a few properties and create capital to invest with. Two flipped deals at $20k a piece is $40 grand in the bank. Not too hard to do & better than the average J.O.B. pays. That's what worked for me.

Now I really have to ask, how realistic is it to 1) wholesale a property and net $20K off the deal, and 2) do two of those in a short period?

Let me just consider this for the local area. I get mails from several local wholesalers. A typical property is $80-100K. A few are larger, some less. Many of them are completely up front about their fees. They list a "under contract at" and "net to us" numbers. I know one of these guys is full time. I see his list every week, so I see property's come and go. I'd say he turns three or four a month, at $4K or so per deal.

What kind of deals net the wholesaler $20K? Half million dollar houses? $200K houses that get bought for $120K and need no rehab?

Most of the deals I see aren't deals at all. At best, the price is 70-75% of ARV and they need significant rehab. After rehab, you're into them for 85% of ARV. These mostly seem to be newbies selling to other newbies.

In cases where I see deals in my farm area, the ARVs are always high. Usually not outrageous, but often 10% over what I consider the ARV to be. In my area I've looked inside and out at a lot of houses, looked at a lot of sold listings, and driven up and down every street multiple times.

Finding these deals takes work. You have to market to get sellers. That means money for some form of marketing. Even if you're ferreting NODs out of the public records yourself and writing to them, you have to pay for paper and postage. Everyone who talks about that says response rates are low and multiple mailings are needed. $200 doesn't go too far ar 42cents/letter, 5 letters per prospect, and a response rate of 1%. That gets you one person to talk to. What's the odds of that being a deal.

Cripes, it takes $50 bucks to fill up a car with gas these days. Doesn't take much driving around to burn a tank of gas.

I'm with Mike. In this business, or pretty much any business, you need cash. If you don't have it, get a job and save up some money.

If this (flipping two houses for $40K profit with less than $200 cash spent) really can be done, I'd really like to see a detailed account of it. How did you get the leads? How did you make contact? What did you spend, both money and time, to do it?

Jon, nice response. You shot down the standard guru generalizations with one shot. :shoot:
I also agree with Mike on his response too. Yes anyone can do a deal with OPM and no $ out of his/her pocket, but if you plan on establishing a full-time landlord business like Mike does, you will have to have capital not only for acquisitions, but for maintenance, misc. capital expenses, etc.

Now if your plan is to simply buy and hold one or two or even 5 properties and continue your 9-5, then perhaps your no money strategy could be used with partners, etc.

Now if your plan is to simply buy and hold one or two or even 5 properties and continue your 9-5, then perhaps your no money strategy could be used with partners, etc.

If you really only have $100 cash to you name and bad/no credit, then EVERYTHING would have to go right if you are going to hold one, two, or 5 rentals. If ANYTHING goes wrong (new furnace, vandalism, damage done by tenant in excess of the security deposit, etc), then you're broke and out of business. I'm sure that you meant if you had a 9-5 that was actually making you excess money (above your normal bills).

This whole idea of starting with $100 to your name and bad/no credit is just riduculous. As Wheatie said, that would not even get you close to doing a first deal unless you were EXTREMELY LUCKY. Even then, $100 is not enough to deal with contingencies of any kind. Again, this is a wing-and-a-prayer strategy with almost no chance of success.

Mike

Mike, I see you quoted me and took what I said out of context. I was in agreement with both you and Jon on this matter. My 1-5 properties with a 9-5 job example was sugggesting that anyone could get some rental properties using a partner who put up all the $, not just for acquisition, but also for reserves. I did not mean that $100 would get them 5 properties and of course over time cap expenses occur requiring cash reserves.
I started in the business that way. My first 8 deals where all done with partners who put up the cash and I found the deals, managed them, etc.
Certainly they still have to do the cash flow analysis, etc. etc. to make sure they are buying right. That is something we all agree on.

Although I do not agree with a lot of Mike's statements, I certainly agree on these points above. $100 or even 1,000 will get you nowhere in RE investing. You must have $/credit or find partners who have this in order to suceed in the landlording business.

Mike, I see you quoted me and took what I said out of context.

Sorry, I see that you did mention partners and I agree with you that a money partner could certainly allow someone with no money to be a partner in rentals.

Mike

I don't know where the original poster lives, but it works by me and I live in Florida where properties have come way down in value.

For someone starting out, you may not do two back to back. But I'm not saying back to back.

My average wholesale deal is $10k but I usually make $15k - $20k per flip. If I'm only going to make 4 grand, I usually don't mess with it. Most of the Legit Wholesalers around here do the same. There's a few guys that play around and act as a bird dog that are willing to make 3 or 4 grand, but for the most part $10k is the going rate.

I have good relationships with my buyers. I'm totally open with them (I have to be, they'll see the contract that I'm assigning to them). If I'm making $20k or above, I usually go for the double close..

You bring up a good point...marketing does cost some $$ and $200 doesn't go far with gas expenses, but if that's all you got..you've gotta start somewhere. I was assuming that this guy had some kind of money coming in other than JUST 200 bucks.

I still think his money would be well spent on bandit signs...:)

As far as doing $20k wholesales on very limited funds, I'll write up a step by step response of exactly how I did my first deals when I was BROKE (with copies of the checks and hud) sometime this weekend. I really don't think I spent more than a few hundred dollars though. Obviously now my budget is higher.

Originally posted by "Wheatie":
Now I really have to ask, how realistic is it to 1) wholesale a property and net $20K off the deal, and 2) do two of those in a short period?

Let me just consider this for the local area. I get mails from several local wholesalers. A typical property is $80-100K. A few are larger, some less. Many of them are completely up front about their fees. They list a "under contract at" and "net to us" numbers. I know one of these guys is full time. I see his list every week, so I see property's come and go. I'd say he turns three or four a month, at $4K or so per deal.

What kind of deals net the wholesaler $20K? Half million dollar houses? $200K houses that get bought for $120K and need no rehab?

Most of the deals I see aren't deals at all. At best, the price is 70-75% of ARV and they need significant rehab. After rehab, you're into them for 85% of ARV. These mostly seem to be newbies selling to other newbies.

In cases where I see deals in my farm area, the ARVs are always high. Usually not outrageous, but often 10% over what I consider the ARV to be. In my area I've looked inside and out at a lot of houses, looked at a lot of sold listings, and driven up and down every street multiple times.

Finding these deals takes work. You have to market to get sellers. That means money for some form of marketing. Even if you're ferreting NODs out of the public records yourself and writing to them, you have to pay for paper and postage. Everyone who talks about that says response rates are low and multiple mailings are needed. $200 doesn't go too far ar 42cents/letter, 5 letters per prospect, and a response rate of 1%. That gets you one person to talk to. What's the odds of that being a deal.

Cripes, it takes $50 bucks to fill up a car with gas these days. Doesn't take much driving around to burn a tank of gas.

I'm with Mike. In this business, or pretty much any business, you need cash. If you don't have it, get a job and save up some money.

If this (flipping two houses for $40K profit with less than $200 cash spent) really can be done, I'd really like to see a detailed account of it. How did you get the leads? How did you make contact? What did you spend, both money and time, to do it?

Just for the record..I did not say to get into landlording with no cash..:) You'd be screwed quick without a partner.

Now if your plan is to simply buy and hold one or two or even 5 properties and continue your 9-5, then perhaps your no money strategy could be used with partners, etc.

Might I suggest something. Depending on your job income and if you are not bogged down by obligations and are skilled at a trade you can start a service business with very little money and use that money to fund your REI business. This is what I did and still do. Sure it's S quadrant money but it's still money and usually quite more than a job. Personally I've never been able to make as much at a job as I have self employed, however were I to have a high paying job I'd stick with it and slowly build cashflow. I won't keep it up forever but I can take it for a few years to get going.

A lot of guys make great points. I would just take your time and learn more about the business and your area if you haven't already done so. At the same time building up you cash and credit to put yourself in the best possible position when your ready to start investing. Having cash and good credit opens a lot of doors for good deals.

As the others have stated, try to save up some more cash before jumping in. During this time, learn as much as you can, and join your local reia. Start networking with successful investors and offer to work with them for free. This will allow you to see how things work in the real world.

Take your $200.
Buy a beat up landscape trailer (craigslist).
Build an A frame on it.
Bolt a sheet of plywood to each side.
Paint the plywood white.
Write (I buy houses cash in 24 hours ###-###-####)
Find an investor that is looking for good deals and has cash available in 24 hours. (The real estate section of your local paper should do it)

Tow the trailer every wher you go, EVERYWHERE!

When people call take down all there info, call you partner, start learning.