Hi, everyone! I was sitting around with a few members of a Meetup group I am in. The question was asked "if you only had $500 to start your first business, how would you use the money?" So, I thought it would be an interesting question to post here. If you only had $500 to start your RE investing, how would you spend it?
I would use $15 to buy Brandon Turner's Book on Investing in Real Estate with No and Low Money Down, then I would use the other $485 on marketing to find wholesale deals or work on a syndication.
@Season Price save save save and more save. Start networking instead. Find others that are involved. Maybe even get a second job. Save as fast as possible. Once you hit the 10k mark. Buy an investment property by moving in and house hacking.
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What @Account Closed said. Then step 2 is go get more money. Being under capitalized has to be the first or second reason for failing in real estate or, really, any business.
Lower monthly expenses, raise monthly income by any means necessary.
Start thinking about Passive income.
If you rent or own a home, sell it and buy a multi family property and "house hack" (live in one door and rent the other(s)). House hacking is a great way to start your investment journey!
@Season Price education. Then I would figure out how to save money.
First I’d go get books and read. 2nd id go figure out how to make money.
Back in the 80's we could buy a 'reserve' on a new build for $500 & then wait until they broke ground before the next $1500 was due & as each build stage was completed more advances were due. In fact once I partnered up we did it a number of times closing on several but then they threw in a no-speculator clause (retroactive at the time but legal) so a partner had to take possession for at least 6 months.
@Season Price you can’t do much with $500. In order to make any meaningful progress in RE it takes money. It either has to be your money or someone else’s money. With $500 you better have someone else’s money.
If I was going to do it without using other people's money, then I would look at buying houses from people who wanted me to take over their loan payments. Basically a no money down deal. The majority of the deals I have purchased for $500 or less where those types of deals.
My third method would be doing wholesale deals,
or paying $500 for an option on a deal and then selling the option.
I would really take a look at your personal finances and figure out why you only have $500. Then I would plug that leak and start saving all you can for a few years. Work extra jobs, ask for a raise, sell the new car you can’t afford and in the mean time educate yourself on how you want to invest in real estate. In a year or two you will be ready with capital to jump in. For those saying find someone with money, that is great and all but most people are not just going to give you a bunch of money with no experience or skin in the game.
if I was I was given a strict budget and challenge to do it I believe I could with the right plan and persistent action. for me I think my plan would be to take the 500$ and negotiate down a person on Facebook marketplace selling an atv or used car that needs work I’d then fix it up and flip it for 1000-1500 . Then I’d run an ad looking to buy a distressed home on a seller financing land contract with 1000 down or I’d find a house behind on taxes wanting to do a subject to sale . After I got the article of agreement I would then rent the place out or possibly flip the contract to another investor
@Season Price I would go to the library and pick up a few books, I would listen to a lot of podcasts. I would keep that 500 dollars and keep adding 10% of my paycheck to that balance and accumulate a good chunk of change until I can really start!
@Season Price $500, pshaw! With just $15, you can buy a big old bottle of reconstituted lemon juice, a squirt bottle, and a canvas bag. You know how you can use lemon juice to make invisible ink? Well, all you need to do is squirt that lemon juice all over your face and cameras won't be able to see you. So squirt away, walk into your bank with the canvas bag, slide it over the counter and demand that they fill it up with good green real-estate-investing cash! Ka-ching, your real estate career will be jumpstarted!
LOL. I guess if you're gonna rob someone the bank is where the money is.
Id stick it in an index fund and keep saving.
I found your comment particularly useful, thank you so much! As a full time student and a part time server paying back my Dad for school loans, I find myself in a similar situation as the posed question. Instead of just reading and listening about real estate, I want to really take action. Thank you again!
I waited until I had a significant amount of money saved up before I bought my first. I would advise someone to save enough for a down payment. If $500.00 could be a down payment, or enough to purchase the entire house, go for it!
@Lydia Kawazoe I am glad you found my comments useful.
Thinking about it I would also add that I would spend more time looking for a buyer than I would looking for the property. Because with a really tight budget like that you want to sell the property very quickly.
So I would try to have a buyer lined up before I bought something.
I would also look at mobile homes, they usually sell for less than homes and the odds of finding a deal on a small budget would be greater.
I'd take 100 different people out for coffee.
I'd bring a Starbucks cup with water in it.
Then, soak up as much I can. Offering to bird dog. Help for free at their sites, or wherever an expert would need help.
Meet as many people as I can until I find a deal. Then, out of those 100, one of them is bound to help me invest for a profit split if I've provided any value to them.
Or, I could wholesale the deal to them if they dont want to partner.
I would invest into books, listen to every bigger pockets podcast and go to as many meetups as possible. Get your name out there, offer to work for free and keep learning. Once you’ve networked, find a deal and take it so someone else. Offer whatever you can. As Brandon says all the time: A real estate deal takes time/hustle, knowledge, and money...You only need 2/3. Prove your value and others will take you under their wing, there are a lot of people in this business who want to see everyone succeed. All the best, Noah Gouldsmith
Love the "Richest Man in Babylon" reference.
And I totally agree.
I would join someone to buy a house, 500 mine and the rest of my partner and I would involve myself in the project as ALL the investement would be mine. You will own nothing but the process experience is PRICELESS !
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