I constantly see new posts from members saying things like • Got a sweet deal, but no money. What do I do? • How do I find private money? • How do I fund my deal if I have bad credit & no income etc? • I want to get started but have no money, What do I do? • I want to flip houses but I don't have any money. What do I do? Do you think that there is way too much encouragement and content out there that promotes no money down investing? I find the majority of the no money down content to be very unrealistic. Thoughts?

No. I think the problem stems from a lack of understanding of what a "no money down" deal is by those that think it's a great way to solve the problems of: 1 - I have no money 2 - I have no experience 3 - I have no knowledge 4 - I have no time 5 - I have no desire to put the time, effort, and money into getting my own - a - Money b - experience c - knowledge d - time

I always recommend that people should do their first few deals with their own money. Once they get a SUCCESSFUL track record in place, then you can start using OPM confidently.

The BiggerPockets Money Podcast was created because one of the most frequently asked questions in these forums is "How do I get started investing in real estate with no money and bad credit?" Answer: You don't. Let's fix your no money and bad credit situation. Something ALWAYS breaks right after you buy a house. The cost of that repair is inversely proportionate to how much you have in reserves. No reserves? You're looking at a new furnace. Plenty of reserves? You need a new outlet cover. If you don't have any money, you should not be investing in real estate. That said... There are plenty of ways to invest using other people's money. But you need to have some of your own in a reserve fund for the just in case scenario that always pops up.

Personally I think so. Too many people put an emphasis on using "other people's money" without explaining that the people doing it successfully have cash reserves and/or lots of experience otherwise. I cringe every time I see someone say "I have $1,000. How do I get started?" Even if that person does find a deal, and get some people to put up the cash, it would only take one bad tenant to drive them to bankruptcy. If you have cash reserves and some experience, then it is ok, in my opinion, to use other people's money to leverage yourself, but without a proper foundation, you are building a house of cards by using other people's money.

Sometimes newbies come on with barely a pipe dream. "I quit my job, have no cash and I am living in my parents house and I want to own 50,000 units." Half the responses are "you got this, go for it". I am all about positive encouragement, but cheering someone on when they are not ready can actually be dangerous. On the flip side, I have seen new investors complain that more experienced investors are negative and their mindset is antiquated. They don't want to hear any of the bad stuff and they can't hold up to adversity. Good luck surviving in this business if you cannot even weather a few comments and learn something from it. My favorite posts are when people say, "Here is my plan, tell me why it won't work." That is someone who understands critical feedback is a key to success. It like when Apple or Tesla pays hackers to find problems in their code. You want to find problems, not ignore them. That is how you get better.

James I really wanted to comment on threads like this that I see all the time but being so new to the forums and with only 1 rental property under my belt I felt it wasn't my place. I was hoping I wouldn't see a lot of the same circumstances that I see all the time in the car business in here, but I do. "I've never paid any bill on time ever and have managed to save $600...can you put me in that E-Class for $400 a month"?? I want to yell but don't. You NEED money to do this folks, as a profession obviously, as a supplemental income / retirement plan definitely, and as a casual hobby I would still say probably. Stop with the discourse about your spirit and ambition and gumption and force of will and get off your ass and get to Burger King in the evenings and stack some cash for a year while you learn all you can and then get going. There is no shame in starting with zero and doing anything you can to save capital to get started. There is no dignity in whining about "No investor taking a shot with you" because you watch videos and have "Drive".

Absolutely! It is a huge problem in my opinion. I see it in the deals being sent to me everyday. I get over a dozen flippers wanting a loan and they have no money. Every "investor" on Facebook is asking for 100% and get angry when they're told it's not out there. 100% comes with a hefty cost when it is available. Do you want to give up 25-30% of your profit and control of the deal. The seminar promoters are guilty of creating this frenzy of misinformation and 100% or no money down propaganda. It's on the radio now from Than Merrill and others.

10000%. There’s too much of that and too many people pushing for high leverage. High leverage will always bite you in the ass eventually. Idk about other people, but I’m more cautious with my investor money than with my own. If I lose my money, whatever it’s gone I can make it back. If I lose my investor money, I lose my reputation. That’s not something I’m willing to do. My investor money only goes to home run deals. It took a long long time to build a track record and trust to access my different sources of funds. I know newbies don’t want to hear it, but investing in RE is risky. You need deep pockets. Save up and start small. Don’t take these insane HML & Private money loans that have terms that will cause you to fail in one way or another.

Folks pushing for "no money down" are going to teach you how to do it for some money down.

@James Wise I absolutely think that there's too much promotion of the "no money down" investing. Look, I get that some people have made that work for them as a beginning strategy, but those people probably worked their butts off, now it seems like so many see it as the quick, easy way to fix all their financial problems. From my perspective, there is no quick fix in REI, it's a long-term strategy and realistically requires a certain amount of liquidity to get started in.

Updated over 6 years ago on 04/18/2019. Most recent reply

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Is there way too much encouragement of no money down investing?

James WisePoster

#4 All Forums Contributor

Real Estate Broker
Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH

Posted April 11, 2019 06:41

I constantly see new posts from members saying things like

Got a sweet deal, but no money. What do I do?
How do I find private money?
How do I fund my deal if I have bad credit & no income etc?
I want to get started but have no money, What do I do?
I want to flip houses but I don't have any money. What do I do?

Do you think that there is way too much encouragement and content out there that promotes no money down investing? I find the majority of the no money down content to be very unrealistic.

Thoughts?

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Is there way too much encouragement of no money down investing?

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