How to get started with no money

Question

I am always hearing people say that they got started with no money out of their own pocket.  I found some houses in my area I would like to start with, but unfortunately I don't have the money to do this.  I work two jobs and my husband also works full time, but we cannot afford to wait for 2 or 3 years before we save the money. I am looking to find someone who wants to loan the money (with interest) for me to get started on this..  If you know how to go about this, please email me 
Thanks everyone.

Ryan Webber · Answer

Tony, I have read the new lease option laws, and there are possible loopholes.  These areas are kindy of shady and because the laws are rather new, there has not been much case law yet around lease option infractions in Texas.  The infractions do fall under the same penalties as contract for deeds.  Contract for deed has case law and the penalties are extremely severe for infractions.  I know of investors who have lost their entire equity in a property that was paid off because of infractions when selling with a contract for deed in Texas.

I am not willing and in no way would promote or recommend for an investor to walk the fine line for doing lease options in Texas.  I am not willing to gamble that much to be the one that ends up being the case law around it.  Talk to any qualified attorney and they will tell you to not do it.  I would recommend that you follow their advice.  There are so many ways to make money in real estate, why gamble with the ways that you could lose it all with.

Michael, birddogging or referring properties to an investor does violate real estate licensing laws which dictate that you must have a license to earn a fee for buying or selling a property for someone else.  I have never seen or heard of anyone being prosecuted for this.  Normally birddogs are not investors, and it would be hard to imagine the real estate commission of a state going after a cable installer or a pizza guy that refers possible investment property to an investor for a referral fee.  Nonetheless, being a birddog technically requires a real estate license, and I personally would recommend that if someone is looking to put that much effort into finding property then they should become a wholesaler.  You do a little more work for a lot more money, and you don't need any license to do it.

Matt H · Answer

the question was how to start with no money.

N/A N/A · Answer

I worked in the mortgage industry for 3 years, and trust me, lenders will check on you to some degree.  It's better to just have the cash to put down for many reasons, a few being; you'll show you are serious about your investment and intent, and you'll SAVE MONEY on your payment/principal amount!  I would follow Ryan Webber's advice and start out WHOLESALING so you can build up the cash reserves quickly to buy houses to hold.  I am just beginning my career in RE now and have researched just about every type of investment strategy out there, wholesaling is by far the EASIEST and QUICKEST...and it's LEGAL!!  Talk to Ryan if you need advice on getting started, he has helped me tremendously already!  Happy Investing!  :wink:

N/A N/A · Answer

Tell them someone told you that some lenders lend based on what's known as "stated income". For example some lenders will lend to people as long as they sign a statement claiming that they've been self employed for 3 years and earn $60k per year. You sign on the dotted line and they hand you the money. They don't check nothing!

This is called mortgage fraud.  Falsifying what you make through stated income.

Matt H · Answer

I never said to lie about it did I? I just said that's what the lender requires. And they approve you with no verification. You should see some of these websites from reputable lenders. They brag about the fact that they'll lend with no verifications of income. Because like I said, they'll take the property if you don't pay. Same with a bank. If you have a good job what does that matter. Because if you got fired or laid off for example then that job means very little to them. The lenders security is your property. You and your pathetic guarantee is just a back up and a back up measure if they can't sell the property for at least what the amount of their mortgage is. That's why they'll usually only lend up to 85%. Now go and get high on OPM. You know opium, the stuff they grow in Afganastan?

N/A N/A · Answer

Credit scores make a difference in getting 100% financing.  And it's usually through like a 80/20 loan program.  I got one from Countrywide, but mind you it was my primary residence at the time.

Kurt Schmid · Answer

Don't you need to at least have the 15% initially to get the first loan and then get that money out with the second?

How can you get more than 15% for the second?  Any legal issues with getting cash out of the deal?

The stated income thing is a bit sketchy as well.  How do lenders verify the stated income?  How typical is the 15% down?

Matt H · Answer

You don't need one single dime of your own money to buy a property. All you need is for the total of both the first mortgage and the second mortgage to total 100% of the purchase price. How you do that is like I said you go out and talk to a mortgage broker. Tell them someone told you that some lenders lend based on what's known as "stated income". For example some lenders will lend to people as long as they sign a statement claiming that they've been self employed for 3 years and earn $60k per year. You sign on the dotted line and they hand you the money. They don't check nothing! But if you don't pay they'll foreclose on your home. That's they're guarantee your home. Most lenders could care less how much money you make anyway. What does it matter? Because you could have the best job in the world right, but say you get fired. Then what? The bank can't go after your pay check. No. They just foreclose on the house. That's why their's lenders that will lend just based on "stated income", because they don't care. Your home is the collateral. Then when you do up the purchase contract you ask for the seller to carry a second mortgage. Many won't. But if you make 100 offers I guarantee you'll find some that will. And the larger the second mortgage the better. Because say your buying a house for $100,000. Say you got a first mortgage for 75%. And say the seller is retiring and doesn't need cash. And is willing to carry a second for $35,000. That means you'll get the house and you'll walk away from the closing with $10,000 cash. Many investors do this all the time. However, this is just one strategy. There are many. I would spend some time getting educated, you'll never become a serious realestate investor without education. Just go to ebay and buy a copy of Carlton Sheets course and of Dolf Deroos's course.

Anyway I got to go and find some more no money down deals!!!

Matt H · Answer

Listen, I love dealing the drug OPM, opium! Other peoples money! You should high on other peoples money asap. .....lol ....but seriously here's what I'd do if I were you.

1) Find a lender that loans based on whats known as "Stated Income". So you call around to some mortgage brokers. Tell them you have no money, but that you're trying to find a lender that offers mortgages based on stated income. Or do a search on the net to find one of these lenders. Typically these lenders are out there to aid small business owners to get mortgages. However, they will lend to just about anyone. And there's tons of these lenders out there. Typically they ask you to be able to put down 15% on a purchase.

2) Next you ask them if the 15% can be in the form of a VTB or second mortgage. If they don't care, then you start making offers. The offer would look like this:

85% First mortgage
15% VTB (second mortgage)

3) Make 100 offers. Out of those you're bound to buy at least 1 house with no money down. Even try to get the lender to carry more than 15% if possible. So perhaps carry like 25%. That way you'll get the house and walk away from the deal with cash in your pocket. My friend has done this.

4) Try to find a house that you could convert each room into a mini bachelor suite. So what you'd do is convert each room into a miniture suite with a mini fridge, and just the basics. And then have them share the main kitchen, and share the bathroom. Turn it into sort of a dorm room or boarding house so to speak. Like really pack them in there!!!

that's one way to get started.

Anthony Sulecki · Answer

Ryan I know a guy personally who does lease options in Texas. I dont know much about them, but I know he does them. He says its all about contracts, and how they are written to circumvent the anti-L/O legislation. Im not from texas, so Im not sure how it all works, but he has taught people from texas how to do them, and they all say they have had no problem.