No liquid cash

14 Replies

Any ideas on how to get into real estate with no liquid cash to purchase or inject into a property?  

@Jason Garrison

You can get into an owner occupied FHA with only 3.5% down and you can ask for 6% sellers concessions to go towards closing costs. You still need to come up with the money for 3.5% down and the required 3 months of reserves if you purchase a 3-4 family. Do you have any one to gift the money to you?

Medium prime lendingJerry Padilla, Prime Lending | [email protected] | 585‑204‑6923 | https://lo.primelending.com/jerry.padilla | NY Lender # NMLS #1084877

Jason, I respect you desire to get into real estate, but feel you may want to focus on saving for the unexpected first.   Be sure you have a personal emergeny fund. Once that is established, look at you finances to see if you could weather a bad real estate situation.  Even the best deals can turn bad quickly.  It's the unexpected cost of ownership that will get investors in trouble. 

 You did not say above what segment of real estate you were in, so I will use my situation for example.  I own 3 properties purchases 5% down, $5k down, and no money down.  The entry to ownership is "cheap", it's the unexpected that will get you.  I have a older 3/2/1 in a great school district. It's never vacant and rarely have a tenant issue. The mortgage and escrow is $539 and I estimate I am "all in" at $625 based on average other expenses.  The rent is $950. Sounds good, clearing $325 a month, and usually it is, but Feb 2014 I renovated, my choice I could have rented as is as done in the past.  6 weeks later the a/c goes out.  That summer, the tenant calls said the couple had split and she can't afford rent.  I hate eviction and the husband had no intention of paying rent.   Convinced them to leave but lost a months rent.   With that house I have had 3 years of good and profitable experiences, but i had a 6 months stretch where that house was sucking me dry both financially and mentally.

Normally things go well otherwise none of us would do this, but you have to have a reserve to cover the unexpected especially when just starting out.  Hope I did not offend.  I gave the same advice to a friend recently who wanted to invest in rentals with very little in the bank.  

Building up reserves will make it far easier for you to be successful in Real Estate.  You would be much better off getting educated in real estate(and you happen to be on a great resource to do so) - while you build up capital, than to do a deal just because you can get into it with no money down.

I've used a lot of credit cards to get it going.  Just make sure your first deal is very low risk, maybe a "hack" would be good for you.

Originally posted by @Jerry Padilla :

@Jason Garrison

You can get into an owner occupied FHA with only 3.5% down and you can ask for 6% sellers concessions to go towards closing costs. You still need to come up with the money for 3.5% down and the required 3 months of reserves if you purchase a 3-4 family. Do you have any one to gift the money to you?

 Who would ask somebody to gift money to them?   Especially for a real estate deal.    I'm just curious if that is something you have run into.     You need to make it on your own in life, not rely on others for handouts. 

No company avatar mediumBrian Mathews, Brian's Heating and Cooling | [email protected] | 512‑350‑8704 | http://www.brianac.com

We gifted to our son when he bought his house.  It wasn't a lot but it helped him get the property and keep reserves to work on it.  Our daughter was so organized when she and her husband bought their house we just helped them get furniture for it.

Budget and work.  Not having money is a symptom of not enough income and/or too many latte's and car payments.  ID your issue and save for a higher goal.

You'll hear a lot of talk about investing with no money, but the reality is you need some money no matter what type of investing you plan to do. Very hard to get anything in real estate (or life in general for that matter) without some investment on your own part. 

Find a partner. Either someone who is a veteran in the field or someone willing to invest with you. The fact is it can be done without the save forever first approach.

WOW!  To all that provided feedback to my question I really appreciate it.  All great points and you each sound very experienced in real estate. I learned about this resource on the 48 days podcast with Dan Miller.  He was absolutely right about the online communities willingnes to help.  Thank you all

Originally posted by @Anna Buffkin :

Jason, I respect you desire to get into real estate, but feel you may want to focus on saving for the unexpected first.   Be sure you have a personal emergeny fund. Once that is established, look at you finances to see if you could weather a bad real estate situation.  Even the best deals can turn bad quickly.  It's the unexpected cost of ownership that will get investors in trouble. 

 You did not say above what segment of real estate you were in, so I will use my situation for example.  I own 3 properties purchases 5% down, $5k down, and no money down.  The entry to ownership is "cheap", it's the unexpected that will get you.  I have a older 3/2/1 in a great school district. It's never vacant and rarely have a tenant issue. The mortgage and escrow is $539 and I estimate I am "all in" at $625 based on average other expenses.  The rent is $950. Sounds good, clearing $325 a month, and usually it is, but Feb 2014 I renovated, my choice I could have rented as is as done in the past.  6 weeks later the a/c goes out.  That summer, the tenant calls said the couple had split and she can't afford rent.  I hate eviction and the husband had no intention of paying rent.   Convinced them to leave but lost a months rent.   With that house I have had 3 years of good and profitable experiences, but i had a 6 months stretch where that house was sucking me dry both financially and mentally.

Normally things go well otherwise none of us would do this, but you have to have a reserve to cover the unexpected especially when just starting out.  Hope I did not offend.  I gave the same advice to a friend recently who wanted to invest in rentals with very little in the bank.  

  Good advice!  Lots of things come up.

I did some bailing out in a buddy's sinking ship recently.

Told him upfront he did't have enough cash or credit for the unexpected.

I know very little about REI ,but I graduated from "Murphy's Law School" and found it's always best to remove the rose colored glasses.

All I have done so far is SFH's and land but if the banks wouldn't loan me a dime and my credit cards all disappeared I can still cover any big ticket items with no real hardship .

   Hopefully as I learn and grow I will continue to keep things under control

  When  investing in something new to me. After I total all costs to the best of my knowledge , I'll add in at least 25% extra

Then on top of that

# 1.  Keep a stash of cash .  And make believe  I don't have it  ,unless it's a dire emergency.

# 2    A bit more  stash 

Just to cover my own [email protected]@

After I step in enough dog poo learning new things 

overtime You learn to spot and avoid most of it    until then

You need a stash for new shoes ;)

Originally posted by @Brian Mathews :
Originally posted by @Jerry Padilla:

@Jason Garrison

You can get into an owner occupied FHA with only 3.5% down and you can ask for 6% sellers concessions to go towards closing costs. You still need to come up with the money for 3.5% down and the required 3 months of reserves if you purchase a 3-4 family. Do you have any one to gift the money to you?

 Who would ask somebody to gift money to them?   Especially for a real estate deal.    I'm just curious if that is something you have run into.     You need to make it on your own in life, not rely on others for handouts. 

FHA does not allow a buyer to borrow money for their low down payments so "maybe" sometimes a loan is labeled a "gift".

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