How Many of you Honestly Started with no Capital?
Central, NJ · Member since 2017 · 35 posts · 19 votes
How Many of you Honestly Started with no Capital?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesI did.. I was 18 years old.. my dad paid for my license course 175.00 ( real estate license) I sold real estate and made commissions.. ( kind of like what wholesalers say they want to do they want to wholesale to make money to buy cash flow) big difference is I did not have to spend a lot of money to be an agent and the contacts made being an agent set me up for the rest of my career.. there was no such thing as wholesaling ( or at least I never heard of it in 1975).
first order of business was to put a roof over my head ( lived in Silicon Valley) best thing I ever did by far.
it was a good 7 to 8 years before I started to buy my own properties. by then I was knocking down big dollars and had a career..
26 Replies
- 9yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Those GURU seminars tell you how.
Yes. I started with no money. I bought 2 SFH on the same block from the same seller, at the same closing, and I refer to it as my duplex separated by 4 houses.
I had a relative loan me the DP (5%), I got the rest financed with an 80% mortgage, and a 15% LOC from the same source.
If I were to start now, I wouldn't do it that way, but I would still have nothing out of pocket.
- Gardiner, ME · Member since 2015 · 190 posts · 177 votes9yI started with negative money and I still have no money. But honestly I'm getting a lot closer. I just analyzed a deal that was a good deal with room to flip. And I had some people interested in money partnering at $40k for the house. Turns out the docs weren't updated and the house sold 2 months ago for $30k. I conservatively estimated that there was $45k of value after rehab costs so that's more like $55k. If I can bring deals like that to people they will be interested. So I'd say. Yes you can start with no money. But it's hard work, you better figure out what you are doing, and you really need to start positioning yourself to be able to buy.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I did.. I was 18 years old.. my dad paid for my license course 175.00 ( real estate license) I sold real estate and made commissions.. ( kind of like what wholesalers say they want to do they want to wholesale to make money to buy cash flow) big difference is I did not have to spend a lot of money to be an agent and the contacts made being an agent set me up for the rest of my career.. there was no such thing as wholesaling ( or at least I never heard of it in 1975).
first order of business was to put a roof over my head ( lived in Silicon Valley) best thing I ever did by far.
it was a good 7 to 8 years before I started to buy my own properties. by then I was knocking down big dollars and had a career..
- Central, NJ · Member since 2017 · 35 posts · 19 votes9yAndrew Ware Never thought of that approach. So you went out to find properties, and brought those if ideas to the people that can help you finance those deals. How did you come to trust those partnerships? Was there any point you felt you were getting the wrong end of a deal?
- Central, NJ · Member since 2017 · 35 posts · 19 votes9yJay Hinrichs Yeah first priority for me is to put a house over my head as well. Real estate has always been on my mind, just never had the capital to do so. Saving now about $100 a month towards REI. It will take a while before I buy my first property. But I'm eager for the journey ahead. Thanks Jay.
- Phoenix, AZ · Member since 2016 · 208 posts · 76 votes9y
@Jarrett T. In the beginning, you shouldn't think of it like that. There is no "wrong end" if you've got nothing (cash-wise) in the deal. As you're getting started and making connections and trying to prove your worth to those who would help you or take a risk by partnering with you, your ROI is infinite if you get ANYTHING. It's all about getting those first learning experiences. You can only learn so much by reading and attending seminars.
- Central, NJ · Member since 2017 · 35 posts · 19 votes9yRobert Lorenz That is true, that question was a bit premature. I will have to find seminars around in my town.
- Gardiner, ME · Member since 2015 · 190 posts · 177 votes9ySeminars aren't your best bet. You may end up worse off than when you started. Seminars are usually sales pitches or setting you up for one. Can be legit but I feel it's the wrong way to start. Start with books and podcast. Learn learn learn. As you are learning talk about it with everyone who will listen. You will find out that people you know or they know people who are doing what you want to do. My hair stylist has 20 units. My wife's friend's husband has a million dollars and climbing of rentals. A 62 year old guy at work who is earning low 30's at the job is buying SFH's all cash and rehabbing them himself and is now sitting on 5 free and clear houses in 6 years. And there's a lot more. So you asked how I trust them? Well that's the wrong question. How do they trust ME? I paid my dues. I have listened to nearly all of the BP podcasts twice, read a pile and a half of books, I analyze deals and am getting good at it, I have useful advice for people who have been doing this for 10+ years even though I've never done a deal yet, and they can see I've been paying down my debt and getting my credit score back up to get in a better position. I have relationships with these and more people now. I don't want anyone to help me. I need cash it's true. But I'll get what I need by helping someone else. Think about it from their point of view. This guy who mostly knows what he is doing brought them a deal. They check it out and can see it's a really is quite good. It makes sense to them that we really can make a tidy profit even splitting me half. They don't have to do all the work from finding the deal, through rehab and selling it. They sit back, let their money work for them, give me advice, and make sure we are on the right track. They also know that I would do everything in my power to protect their investment, am more worried that they make money because I want to do this many times not just once. On top of all that we (will) have a contract explaining our expectations and what will happen if things go wrong. Here's your homework if you are serious for your situation. Set for Life by Scott Trench The Book on Investing In Real Estate with No (and Low) Money Down by Brandon Turner The Millionaire Real Estate Investor by Jenks , Keller, and Papasan Rich Dad, Poor Dad by Robert Kiyosaki As many of the Bigger Pockets podcasts as you can listen to Max cost $35 unless you can get them free at the library
- Real Estate Agent · Seaford, DE · Member since 2016 · 1 post · 0 votes9y
I couldn't agree more with Andrew in regards to attaining knowledge! I purchased my first property - with less than $5k in 2012. Since then we've acquired 7 units - and are now back at 4 units. Everything I learned was from an incredible mentor, books, podcasts and general trial/error. Our financial success and security has gone hand in hand with growing our real estate portfolio. When we started we barely had enough to pay all of our bills - it all starts with that 1st deal. We've still got a long way to go to reach our "goal" but every property is another step.
- 9yMindy JensenPro MemberBiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
@Jarrett T. , 100 years ago, when financing was a whole lot easier to get, I started out with $1,500 borrowed down payment from my parents. I sold it 4 years later for $25k profit and have flipped my way to financial freedom.
Yes, you can do it, starting with no money of your own. No, you can't do it with no money at all.
You'll have to be more creative than I was, because loans are more difficult to qualify for now. Also, I was living in a dirt-cheap place and bought a property that cost 2x my annual salary. It was easy to qualify for it once I had my down payment.
- Central, NJ · Member since 2017 · 35 posts · 19 votes9yAndrew Ware Just got off work, doing home work as we speak! https://www.dropbox.com/s/xwc6aiqrz1i4yal/Biggerpockets1.jpeg?dl=0
- Central, NJ · Member since 2017 · 35 posts · 19 votes9y
Ive read Rich Dad Poor Dad already.
- Redding, CA · Member since 2016 · 224 posts · 143 votes9y
Jarrett
I have been doing all kinds of investing for 50 years in Northern California, mainly SFHs and duplexes. I ended up with 250 houses in Northern Calif, but did not have a lot of cash to start.
You almost always need a down payment, BUT IT DOES NOT HAVE TO BE YOUR MONEY.
Here is a simple one I did.
For sale. Duplex, $75,000. Adult child inherited from deceased mom (very important to find details behind the sale. If agent does not know, ask if he/she can find out). The adult child wanted nothing to do with tenants and it was important to sell the property quickly (she needed cash).
My offer (one day after it came on the market):
$80,000 ($5000 over asking). That $5000 to be credited to me at close of escrow.
$40,000 hard money loan. I knew the hard money folks and could get the loan within a week because the loan was only about 50% of the price.
I asked her to carry back the balance, $40,000 for 10 years, at 7%. She agreed.
In the offer I said the $5000 I would get back at escrow would be used to fix up her run down duplex and make the collateral for her $40000 loan nicer and worth more.
Deal closed as above.
Very important to know that YOU CAN DO DOWN DEALS, BUT MOST OF THE TIME THEY HAVE NEGATIVE CASH FLOW because of large mortgages.
I knew this would work, because the 2 bedroom unit upstairs was $125 less than market value and the 3 bedroom down stairs was $200 below market rent.
Why did the lady say yes? She got a bunch of cash and I owed her $40,000.
BTW, 2 years after the sale, after making monthly payments, I sent her a note, "I inherited some money from an uncle and would like to pay off that $40000 loan by giving you $20,000." She left a voicemail saying that I was taking advantage of her and would only take $28000 to pay off the $40000 loan. Fine with me. She gave me a 30% discoun a what I OWED TO HER. Where did the $28k come from? I was in middle of a refi, it was going to close in a week. I came up with the $28k from every source I could to pay her before the refi. close.
2 weeks after I paid her, I called her to see if all was well with her and she thanked me for the chunk of cash. She was able to take her grandkids on vacation. She could not do that the the small monthly checks she got from me on the $40K loan.
Good luck. Let me know if I can help you.
Fixer Jay DeCima
- Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes9y
I started with maybe $3k in the bank, $5k in 401k when I moved to Maui. Got my real estate license, lived frugally, worked paycheck to paycheck until I got my broker license. Opened my own brokerage, sold some more homes, started making good money. Then I bought into equity with my first house, a short sale duplex in 2013.
Then it snowballed. I really do believe if you can ever save up $50k that is the key. Once I got the house I was able to leverage my equity to buy other homes and build wealth.
I did not get a loan from family, I did not get inheritance, I actually earned every cent that I've made. And not a lot of folks can say that.
I did get a full scholarship to college, which I didn't realize the value of at the time, so I have no student debt, unique in my generation, so that helped.
Not a fan of seminars either since they try to sell you something that should be free, and for the cost of the course you can almost get into a house in some areas. But works for some. There's more than one way to skin a cat! Keep up the good work @Jarrett T.
- Central, NJ · Member since 2017 · 35 posts · 19 votes9y
Thanks @Jay DeCima and @Loren Clive for your stories.
- Investor · Kent, WA · Member since 2015 · 624 posts · 274 votes9y
I want to echo what @Jay DeCima said. It doesn't have to be your money.
Happy investing. - Real Estate Investor & Consultant · Los Angeles, CA · Member since 2016 · 620 posts · 386 votes9y
@Jarrett T. I fit into this category! I went into a joint-venture with my partner who already had private money invested, and it was my job to negotiate with HMLs to generate the leverage the private money into having multiple flips done at one time, manage all of the budgets, timelines, insurance, investor relations, etc, etc.
It's been a great arrangement.
Onwards!
- Central, NJ · Member since 2017 · 35 posts · 19 votes9yShawn Ward Thats amazing man, glad it worked out for you. Hoping I could connect with some amazing people to partner with.
- 9yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
I started with $3,000 to my name, and a college degree, a $48K per year job, but no debt. So, you could argue that I had six figures in assets with the degree, or basically nothing if we are just counting the debt.
I accumulated my first $20,000 by simply living frugally, and I did that in about a year on that salary. I used that money to house-hack and because I lived frugally and had a bit of savings, I was able to quit my job and take a chance on a startup called BiggerPockets. I've continued to save, work hard, and invest in real estate and index funds over the past few years, and believe that this is a winning formula that I can sustain for a long time with great results.
- Investor · Baltimore, MD · Member since 2015 · 160 posts · 76 votes9y
I bought a duplex a few months after I graduated college. I had inherited a few thousand from my grandparents and for once I actually followed my dad's advice ("why don't you buy a house?"). This was 2004, and I had no clue what I was doing but having someone rent the upstairs and pay for the mortgage sounded pretty good for a single guy with a $10/hr. job. So one FHA loan later I was a landlord in a 1930s, sorta run down, brick row house. I house hacked before it was house hacking! 2 years later after fixing it up and having moved on to a single family home with my new wife we sold it and walked away with just under 30k. That was 2006 and luckily the timing of the sale was right! We didn't fare so well on the SF we owned and got out of REI for a while. But I've been re-educating myself lately and am jumping back in because I don't want to work forever.
- Investor · Redlands, CA · Member since 2015 · 82 posts · 48 votes9y
@Jarrett T. Great topic! I got started at 23 with very little in savings or retirement accounts, but was fortunate enough to leverage my VA benefits to purchase my first house with zero money out of pocket, and the seller had to make concessions to repair certain things (i.e. all new flooring) to meet VA standards. The house was not in the best neighborhood but was in an expensive northern CA market that has experienced great appreciation over the past two decades. I sold that first property for $100k more than I paid for it one year later, and thought that was a pretty good deal, but fast forward 17 years, that same property is now worth over $500k!
- Central, NJ · Member since 2017 · 35 posts · 19 votes9y
Great stories guys lets keep it going?
- Investor · Jacksonville, FL · Member since 2015 · 54 posts · 6 votes9y
I've read everyone's responses and nobody has really told you how they did it. lol I mean they told you, but didn't tell you and that's exactly what you get at seminars. Great little nuggets of information mainly from people who attend the seminars. Countless people have asked me how to get into REI - it's all about finding properties. Everyone says "but I don't have money" or "I don't know any other investors"(which is laughable as they are literally telling an investor that they do not know any other investors). F&$k the money. You don't need the money unless you have something to spend it on! The only real piece of advice I give is simple. Find a house to flip and I'll show you how to flip it(Also amazing how there is a huge lack of followup questions after that statement). RIGHT NOW if you have a property to present the money will nearly walk right into your pocket. Everybody and their brother's cousin is a flipper and the money being thrown around is ridiculous. Of course there is a whole lot more to it, but in this market, at this time just find the property and you'll be surprised how easy it is to get funded. I wasn't even going to respond to this, so I encourage you to read and reread this little response and let it sink in. Good luck!
- Central, NJ · Member since 2017 · 35 posts · 19 votes9yMarc Bracy thanks for that message. Will save and read again.
- Investor · Leesburg, GA · Member since 2016 · 105 posts · 23 votes9y
@Jarrett T. my first property I had no money. I called one of my credit card companies and asked for a zero percent promotion since I hadn't use it in awhile. I then applied for credit card with a local credit union that does cash advance at the same rate of purchase; which was 8.75%. I got the DP off of that credit card and also did the rehab then transferred the balance to the 0% at 3% transfer rate and before the 12 months ended refinanced the house and took some equity out and paid credit card with a little left for next purchase. I don't recommend this for everyone, but I couldn't keep use no money as a means of not trying to become financially free. I'm glad I did it and now have two homes. I'm currently placing a bid on another house; which I don't have the DP for but I reached out to a friend, who likes good returns and offered him 6% on his money and paid back in 8 months. He accepted. I stop saying I can't and keep saying how can I. You never know what you can come up with when you start brainstorm. I also have another option; which I don't care for, but if I have to I will. My truck is currently paid off. I was thinking about going to a bank not a title pawn and see if I could use it as collateral for a loan.
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