Hi Everyone,
Happy Friday first of all!! I recently got divorced and am up to my eyeballs in debt and my credit score has taken a hit (once a gleaming 750, now a less then great 640ish).
I am highly motivated and already have direct mail campaigns for multi-family apartments in the mail for the Sacramento area. I am also hunting down deals for self-storage properties.
My problem is $$$ money! :( I am employped full time and make almost $100k a year. However, as I said the "big D" has left me in debt up to my eye balls!
I have reached out to lenders for a mortgage who basically laugh in my face because I have no funds. How does one get started without funds??? Where can I get funds??? (and no I don't have friends or family with deep pockets).
Thanks in advance!!
@Jason S. if you don't have a support structure to tap into... the unhappy answer is that there is no short cut. You have to invest the time and effort to rebuild it all back up. Get a side gig for extra cash flow, stop all extra spending and live like a monk. At the same time get out to REI meet ups and get your name and face out there. See if you can bring value to somebody that will be willing to bring you in on a deal. It personally took me decades to build up the financial base to get going, but once I did I was able to start making some serious progress on wealth building. Sorry I was not able to give you a silver bullet for your problems, but this is the reality of the situation.
Ya bro! How’s that going for ya?
Exactly. It’s not.
Notice how I asked what kind if debt FIRST. If it was medical debt or mortgage debt, you’d be getting more help here.
We know how you live - fiscally irresponsibly.
Why is your debt strapping you down if you’re making close to $100k and don’t have mortgage debt?
Stinks of mismanagement and priorities being all sorts of jacked up.
You don’t need deal help, you need personal finance help.
Not sure if anyone mentioned this but try to Airbnb your spare rooms if you don't want to rent. We're doing this and cut our $2400 rent down to ~$1400 doing an Airbnb on our spare room and this is charging roughly $60 a night.
Also, cut off expenses that aren't adding value to what you NEED. Use a cheap MNVO instead of A, S, T, or V for your cell plan. I used to use a $30 a month plan and I just switched to Sprint's $18 a month plan. Cut out spotify, amazon prime, HBO etc and use the free time to learn to invest or invest in your personal growth.
There's a lot of ways, just need to look at your overall financial picture and where your money is going and focus on the trouble spots. I find that tackling your expenses is the best way to start. If you can't manage your personal expenses and income then you need to be disciplined until you can. Anything after that, investing etc, just builds on the foundations you learned through managing your personal expenses.
I have seen it accomplished both ways: (1) paying down debt, saving money and waiting for the right time, and (2) wholesaling. I get a lot of calls from people in your shoes and there is no one right answer in my opinion. It just depends on which strategy makes better sense to you (similar to buy/sell vs. buy/hold strategies). It's your preference really and usually comes down to your tolerance level for the nuances that accompany each one.
Based on your responses, you are trying to find a creative way to enter the arena. Without cash reserves and solid credit, that is difficult. Not impossible, but difficult.
Your stated score would not be a problem for most hard money lenders. The no cash component will be your biggest hurdle. What you may want to consider is something that was was mentioned earlier. Obtaining your realtor's license to get your feet wet. Join a realtor that understands and deals with investment properties. This way you can begin building your network (and even adding to your database of existing leads your current marketing campaign brings in). You will also learn to identify good opportunities under the tutelage of a real estate pro. All this can be done while you are working on your credit/debt if you want.
What you lack right now is leverage. In this business you have to possess one or more of the following:
1.) Cash to invest (enough for deposits, skin in the game lenders want you to have, closing costs, carrying costs, and to kick off rehab work).
2.) A quality deal you have control (under contract, seller only wants to work with you, etc.)
3.) Ability to create/find opportunities (off market deals, finding that diamond in the rough, exploring avenues where the rest of the crowd may be a few steps behind, having network of professionals who trust you and want to deal with you -- i.e. probate attorneys, CPA's, REO listing agents, wholesalers, etc.).
4.) Knowledge
One of more of the above will attract people who want to work with you. Excluding #1, cash to invest, the other three (whether collectively or as a whole, can be appealing). When you don't have cash, you need to partner with individuals who do. However, you have to ask yourself, "What am I bringing to the table?" "What's my leverage?". Once you have sufficiently built up your leverage, you can make a pitch to someone with cash to and they may bite.
If you can specialize in 2 to 4 above, then a cash investor may take interest in working with you. If so, then it becomes a matter of structure. In wholesaling, you sell the deal. Quick in, quick out / but less money. Joint venture partnerships would be an option to consider. Pitch can be something like, "Mr. Investor, I can offer X, Y and Z (or just Z) ... If you would be interested in partnering with me, I can show you how this can be a long term beneficial relationship for both of us". There are different ways to structure this (writing them into the business entity and operating agreement, having them do a second trust against the property, etc.). You may want to consult an attorney about the pros and cons regarding joint venture partnerships, partnerships, business collaborations, etc.
Hustle and drive play a significant role in this too. However, it won't be that appealing to a cash investor unless he/she wants to incorporate you into their proprietary system. And most times, if you have that grind mentality, they will feel somewhat threatened by you ultimately becoming their competition (unless of course they are retiring or getting out of the business).
I hope this somewhat helps.
Georges Franco
Try Wholesaling realestate. Generate money fast, within 30 or so days. I have done deals that have closed quicker. It takes work though. Alot of people hear about wholesaling and think its easy, but it not, but like anything you have to learn your craft. But look into it if you want some money fast.
@Jason S. I think this podcast was written for investors like yourself. I hope you find some useful information and best of luck in improving your personal finances and starting your investing career.
@Jason S. Hey Jason, at some point I also needed a way to fund certain deals and had no money. But I was determined to find someone who can help me fund them.
I started going to REI meet ups around my area and started to get to know people with money (they're always the quietest ones in the room, in my opinion). I began building relationships with them by taking them out to lunch, talking about Real Estate, and just asking them if they would be willing to fund deals for me if it made sense. And it worked!
I currently have 3 partners that I can count on if I find something that makes sense for both of us, or in some cases, all of us. Its all about building that relationship and keeping it! Bring value to them, and the money will come to you.
Good luck!
Jason,
First, I'm sorry about your divorce. I went through the same thing a while back where I ended up with over $100k in debt, overdue mortgage payments and child support to pay. I focussed on paying the debt off. Also, I used the humbling time to assess the types of people I bring into my life. I know your cost of living May be higher than mine was (I live in Virginia), but the skills you develop from this will be extremely useful in many ways.
You got this
Go to REIA meeting in your area, make an announcement that you want to wholesale with another wholesaler. You want to split marketing cost. Someone will reach out to you. split direct mail cost with the best, pursue other marketing methods with the person. When a deal comes you both will split profits. When you have a great juicy deal money will come. I am a huge believer in seller finance. I used to think some sellers want their money right away but i have met investors who buy on seller finance. I met an investor in a REIA meeting who paid 10k for down-payment on a duplex. 10k wasn't her money. Her friend was her lender. She is paying her friend interest on the 10k but still cash flowing monthly. In the mean time, find other side hustles like postmates, ubereats, lyft, uber, etc
While I don't disagree with the other comments, I do want to add something. Investigate "transactional funding" and "joint ventures". Go to your local Real Estate Investors Association. Just because you don't have the money right now, doesn't mean that someone with money won't partner up with you if you have a good deal. Keep studying and stay creative!
@Jason S. your making $100,000 a year you should have no problem saving something every month. Read Dave Ramsey's book and i believe that will help you follow a system for getting out of debt and living below your means. Best of Luck!
Hi @Jason S.,
I am a new investor and the reality is that there is no free money that comes from the sky. My husband and I tried for many years without money. Thank God out finances improve greatly this year and we were able to invest in two properties.
Now, I will suggest the following:
Create a financial plan that includes the following:
One year goal: reduce your expenses, including credit cards. Do not use what you do not have. It is fine to pay your bills with it, but as soon as you received your pay-check pay. Do not wait for the 30 days.
A couple of options to raise money:
If you receive at any given time a return during tax season. SAVE IT for your first investment.
Save any little money you can during that year $20 a month or more. Basically whatever you can.
I made cash only payments and use envelops to measure my expenses.
When you do not have the financial support this is the best way to start.
Ask yourself within a year how much can I raise? and how well my credit score will be?
Your next goal will start on the following year:
1. Look at your credit and if it has improved applied for a loan on a muti-family home, so you can collect the rent and pay the loan, if unable to sell.
2. Ask for a loan in your retirement plan
3. Keep all the money you collected from the previous year for emergency only and repeat the process.
Last resort and the most difficult-find a hard money lender, but come with a plan on how you are planning to make him/her obtain a profit. They will not look at your credit or income, but the value of the property as a guarantee.
Disclaimer: I am not a lawyer, financial advisor or Realtor. LOL, but I have learn a lot on this website.
Hi Jason,
I have been following your post since you only had a few replied, I'm in a similar situation where I have some cash, but not enough to buy the homes I want. I also understand that $100K in Cali is closer to about $40,000 with all your debt repayment, child support, etc., so its hard to save when there's nothing left. Of course you know that you can get another job to save money, but my guess is if you get another job-the ex can take you back to court and take some of that too which defeats the purpose. '
Your best bet is to wholesale for now- you find a super good deal (how are the yellow letters coming?) and find a buyer who will still get a good deal for a little bit higher price and you take the difference. That takes a title company and a couple of contracts, but none of your own money. It will, however, take work because you have to find the deal and the buyers. To do both of those things, you will have to network, perhaps build a website to post deals or just post them here. You can also look for deals out of state to pitch to people in your state who may have some money to invest. The real estate agent angle is a good one, but it may take away from time with your kids and limit your investing biz in the end.
@Jason S. I'm a little surprised at the response you are getting from some of our colleagues. I think your real estate investing can be your second job. There are tools out there. In my area, MAREIA just introduced a Find HOT Off-Market Deals. "You follow-up & Split Wholesale Fees 50/50." I have not tried this, but I think this lead is better than a lecture on how you should pay down your debt. If you follow-up and find out anything, can you share it with this group.
The first thing you need to do is build your personal credit.