Getting Started

3 Replies

Hi im new to the site, and new to REI. I've been reading "Buying Real Estate without Cash or Credit" by peter Conti & David Finkel. Its a great book, and my nose is in it whenever im not at work. I was just wondering did anyone else get started in this business with very little money or credit. And if so what were some of the ways you aquired your property. Thanks in advance.

When I just started working for myself and my fiance' was in school, we bought a multi-family and lived in one unit, using a no-doc loan which means the bank gives you the money without verifying income, assets, employment, etc. In return you pay a higher interest rate, but that's one way to borrow without having much in terms of income. It does require some money down and the interest rate varies depending on your credit score and how much documentation you will provide (providing absolutely nothing results in higher interest rates, naturally). We can then refinance later once the situation improves.

Another small angle: you can get higher % of a home financed (up to 100%) if it's owner occupied, aka you live in it as a primary residence. Most investment loans require 10%-20% down. If you have no cash or credit then you're really not in a good position to be buying real estate investments from the bank's perspective. So, buy one for yourself and live in it two years (to get the cap gains exclusion). Then move and rent it out. Hopefully by then you've built up a little positive credit (assuming you pay your mortgage on time) and can save a little $$$. Then buy your next personal residence. It's a slower way to accumulate rental property--one every two years--but it saves you one interest rates and gets a higher % of each deal financed/leveraged.

Only partial answers, but frankly I don't think there's a simple, single answer.

I think that most of this started in this business without any money or credit. I think starting out broke helps people become more successful because it forces us to be creative and learn techniques like subject-to and lease option.

The folks who have money end up squandering it away and not lasting very long.

I don't care whether you use straight options or lease options, by using an option and then mastering networking and negotiations, you can be successful without cash or credit.

I see many folks talking about subject too deals, but for my two cents, I have always found it hard to get someone to sign over their deed unless they are in terrible shape. To me, it's much easier to do an option, network and make sure everybody wins.