Has Anyone Found Success after Starting with small $ &amp; no income?

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

5y

@Phillip Bradrick Thanks for your reply! I do have some money to bring to the table but I'm asking if & how has anyone been able to successfully complete a fix & flip with no source of income (unemployed) and without drying up every cent of savings Or if they've been able to do it with no money down at all.

I imagine there are some people who have very generous, supportive family members who fronted them some money. That's not my situation unfortunately.

It would be really insightful to hear from those who for example, had no job, only $30k in savings but were able to connect with a lender & GC/crew and got their first project done and successfully sold it and made a profit. I know they're out there and I'll bet they'll say that the process became significantly smoother if not easier after that first flip & sale.

I definitely appreciate the feedback I've gotten on my other questions but they're leading me to think that I just don't have enough liquid cash available. I am still sending out my resume so it's not like I've given up on reestablishing consistent income. I just don't want to have to wait until I'm 59 1/2 to start investing in RE (using retirement funds) and I don't want to have to wait until I'm employed again to then try to "fit in" time to start and oversee fix & flip and home sale projects.

Thanks for reading my questions and engaging with me Phillip.

Cris Normandt

Lender · Las Vegas, NV · Member since 2020 · 46 posts · 14 votes

5y

It looks like from your situation that the HML might be your best bet. Conventional financing is probably off the table with no job to determine an income source. The HML's that I have talked to do not give 100% LTV either so you will need to figure out how much you need to contribute on top of the renovation costs when purchasing. My branch does work with certain institutions that handle flips. They also do their own due diligence on the property so make sure you analyze correctly.

Don't let this deter you, there are plenty of people who started with less and made it work. They used credit cards (which I do not recommend) or any other means of financing to get that first deal.

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

5y

@Cris Normandt Thanks for your insight!

I haven't included my credit cards in my available cash only because, well, I don't really want to max them out. But I have them in mind as back ups for things that I can pay off in full like a washer & dryer, fridge,,stuff that might not cost more than $2k. I've achieved excellent credit by paying all my credit card bills off in full each month and I really like how that feels and looks. But I'm not completely opposed to going into temporary cc debt with the prospect of a $20, $30k or more profit in short order.

I have a business line of credit that I can use as well as my personal credit cards but I'm just trying to see what I can do with the help of HM and maybe not have to touch my cards or at least not hit them too hard. My hunt for a right HML so far I've found one who wants to see 6 months of reserves and one who wants to see only 3 months but they both require a property asking no less than $150k. As you know, it's all about location. Here in Atlanta, the prime downtown location seems to only have extreme gut jobs in the $125-$200k range or not so bad fixers asking $250 and up. But I wonder what's available off-market. So my hunt continues on that front as well.

As I write this I now realize I'm doing a lot of hunting, lol! Somehow I'm not discouraged,,,,yet. I'm pretty optimistic that I'll be made a job offer soon, which will open up conventional rehab loans and house hack options. I think I'll eventually find a HML who will work with me & my limited coh too. So the hunt(s) continue.

Thanks for the encouragement Cris.

Cris Normandt

Lender · Las Vegas, NV · Member since 2020 · 46 posts · 14 votes

5y

@Steven Harris why not look outside of ATL. I am from NC and used to live in Charlotte before moving to Las Vegas. There are a ton of opportunities in the Sc and NC market that is a short drive from where you are at? In the desired price range.

Aidan Wong

Lender · Oahu, HI · Member since 2020 · 18 posts · 18 votes

5y

@Steven Harris this is how I got into the business broke but with a dream. Find a killer off market deal, offer it to a local (but reputable) investor, and come in and JV with him. Split the profits however you see fair, but that'll also allow you to shadow someone with experience. I'd take the knowledge and experience over cash any day. Maybe do that for a couple of deals until you have enough cash and experience to take some on by yourself.

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

5y

Hey @Aidan Wong thanks for reminding me about the joint venture possibility. You mentioned that in our phone chat but it kinda slipped my mind. I am open to that possibility very much as well. I wonder if I might find any here on BiggerPockets. They don't necessarily have to be located here in Atlanta either, right? Of course finding someone local to partner with would allow me to shadow them to see how they assess a property and I'd get to meet their GC so maybe a local partner is better.

I think I'll look for any kind of RE investor meet-ups...

Thanks again Aidan!

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

5y

Not a bad idea @Cris Normandt

Never really gave thought to looking outside of Atlanta only because I know for sure this RE market is hot and East Point is still up & coming. But it probably is worth researching the markets of other nearby states that I wouldn't have to fly to.

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Brenden MitchumBusiness Member

Rental Property Investor · Atlanta, GA · Member since 2019 · 1k+ posts · 872 votes

5y

Hey @Steven Harris

Fantastic advice here but I believe everyone is missing the point, to be honest. @Brandon Turner didn't start his investing career with zero income and most folks don't. RE investing is a fantastic way to build wealth but you can't build on something you don't have. The exception to this is if you go full-time into real estate as an agent, wholesaler, flipper, etc. But, essentially, your first step here should be to figure out how you're going to start generating income. If you currently do not have a job and do not have any skills or degree that allows for high income potential, you should look to RE for work. I'd suggest either the agent or wholesaler route as you will learn a ton in the process.

Atlanta is a tough market and cash flow isn't easy to come by so if you're able to get out there and start finding/creating deals, you very well might be able to find an investor to JV with. However, don't expect to get much on the first deal or two so you'll still be stuck with the issue of having no income. Definitely start networking by attending local meetups and staying active here on BP as you never know who you might meet!

Lastly, it sound like moving to another market is not the solution for you. If you do decide to look outside of ATL, I highly recommend you only do so if you can move there. There are folks who invest successfully OOS but these aren't typically folks who are broke. You'll want to be local if your plan is to make up for lack of $$ with hustle. Either way, pick a market and stay focused - become an expert and opportunity will come.

Please, feel free to reach out anytime if you have other questions or just want to chat!

4 Reply

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

5y

Originally posted by @Steven Harris:

Hi all,

I'm reading here on BiggerPockets and other places of how it is totally possible to start investing in RE doing fix & flips with no money down or very little AND without having current income. I think I might've read something about that in Rental Property Investing by @Brandon Turner, if not, I definitely read it somewhere here in BiggerPockets.

My situation is that while I am still looking for work, I want to make the most of my excellent credit and the money that I have. I'm looking at various HML's trying to find one who best fit my needs and I'm looking for quick, cosmetic fixes that cost no more than $150k to buy and no more than $15k to fix up that'll have an arv in the $185-$200k range.

These numbers are based solely off of my own cash on hand. With the right HML obviously I could look for slightly more expensive fixers and have a larger rehab budget but I still want my first project to be super simple, not a gut job or anything that needs more than 21 days to complete.

Is there anyone here who started out this way and "against the odds" successfully completed a project through to selling and making a profit? I'd love to here from you.

Thanks all!

Steven

Serious question

how are you not working when you live close to ATLANTA?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

Originally posted by @Brenden Mitchum:

Hey @Steven Harris

Fantastic advice here but I believe everyone is missing the point, to be honest. @Brandon Turner didn't start his investing career with zero income and most folks don't. RE investing is a fantastic way to build wealth but you can't build on something you don't have. The exception to this is if you go full-time into real estate as an agent, wholesaler, flipper, etc. But, essentially, your first step here should be to figure out how you're going to start generating income. If you currently do not have a job and do not have any skills or degree that allows for high income potential, you should look to RE for work. I'd suggest either the agent or wholesaler route as you will learn a ton in the process.

Atlanta is a tough market and cash flow isn't easy to come by so if you're able to get out there and start finding/creating deals, you very well might be able to find an investor to JV with. However, don't expect to get much on the first deal or two so you'll still be stuck with the issue of having no income. Definitely start networking by attending local meetups and staying active here on BP as you never know who you might meet!

Lastly, it sound like moving to another market is not the solution for you. If you do decide to look outside of ATL, I highly recommend you only do so if you can move there. There are folks who invest successfully OOS but these aren't typically folks who are broke. You'll want to be local if your plan is to make up for lack of $$ with hustle. Either way, pick a market and stay focused - become an expert and opportunity will come.

Please, feel free to reach out anytime if you have other questions or just want to chat!

Very good points.. when you do not have liquidity and experince then in my mind you need to apprentice for a while to build those things.. this I want it all now is not reality.. neither is get rich with NONE of your own money or credit.. can it happen sure.. but that just sells guru class's and books.. to me if you want in the industry you need to get into the industry in a capacity were your paid to learn.

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2 Reply

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

4y

@Brenden Mitchum Thanks for your insight on this.

I am still looking for work and I actually have a couple of prospects that might be about to offer me a position. I agree that if I were to look at possible flips outside of Atl, I would want to move there just so I can physically be there to see how the job is progressing and all that goes with a fix & flip. Phone it in this early in the game is not an option I'm interested in.

I'm re-reading Rental Property Investing now. I want to re-read the scenarios where @Brandon Turner explains how to use $20k to get started while not relying on current income(not to say that there was no income).

Thanks very much for sharing your knowledge Brenden.

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

4y

@Michael Plante, I'm not really sure how to answer your question except to say that I just have not found work that is suitable for me. I'm guessing you're believing the narrative peddled by the media that there are just soooo many jobs available just waiting to be filled. IF there are, then those are the jobs that pay far less than I'm used to being paid and so I'm not going to take a minimum wage job just to say "I'm back to work". And I'm not going to start working as a sales clerk at Forever 21 which might pay a few cents more than minimum wage but since I have no experience in retail, I'd probably still start at minimum wage.

I'd rather keep looking for work in corporate, government and the nonprofit sectors where I have years of experience and can expect a salary that factors in my experience. In the meantime as I continue my job hunt(I said this in one of my earlier messages here), I am seeing if & how I can make the most of money I have and excellent credit to get into RE investing by starting out with a simple, quick cosmetic fix & flip. I have no wild dreams that my first or even my second project would make me rich either. I want the experience. If I can make $20 or $30k in the process, that'll be great. I would start 2022 with some experience under my belt and working relationships established.

Thanks for asking though.

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

4y

Originally posted by @Steven Harris:

@Michael Plante, I'm not really sure how to answer your question except to say that I just have not found work that is suitable for me. I'm guessing you're believing the narrative peddled by the media that there are just soooo many jobs available just waiting to be filled. IF there are, then those are the jobs that pay far less than I'm used to being paid and so I'm not going to take a minimum wage job just to say "I'm back to work". And I'm not going to start working as a sales clerk at Forever 21 which might pay a few cents more than minimum wage but since I have no experience in retail, I'd probably still start at minimum wage.

I'd rather keep looking for work in corporate, government and the nonprofit sectors where I have years of experience and can expect a salary that factors in my experience. In the meantime as I continue my job hunt(I said this in one of my earlier messages here), I am seeing if & how I can make the most of money I have and excellent credit to get into RE investing by starting out with a simple, quick cosmetic fix & flip. I have no wild dreams that my first or even my second project would make me rich either. I want the experience. If I can make $20 or $30k in the process, that'll be great. I would start 2022 with some experience under my belt and working relationships established.

Thanks for asking though.

I worked 2 minimum wage jobs (80 hours) a week) to buy my first real estate investment

you’re welcome

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

4y

@Michael Plante good for you, sir. I'm glad it all paid off.

Demetrius Simpson

Fayetteville, NC · Member since 2011 · 5 posts · 1 vote

4y

@Steven Harris that is a hard sell but with $30K in savings as collateral you may be able to go to a private lender; however, you are going to have to add a member to your LLC or Corp with a job ; especially since you are new and can not produce a schedule of real estate owned.

Most private lenders that I know or have worked with say that the asset is the main pull as far as credit during analyzing the deal; therefor, you have to have a strong deal that makes you money and able to communicate how you are going effectively monetize the project, in the form of an executive summary.

I remember at one time some lenders were doing 80/100, 80%LTV and 100% rehab, I do not know if they are still doing that, I will have to reach out to some of them to see their parameters these days. The point here is to look into private money as an option, if you need help with that reach out to me and maybe I can assist you.

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

4y

@Demetrius Simpson thanks for your insight. I've found a lender that does 90/100 on a fix & flip and 85% on a rental loan, which all sounds good but I haven't committed to anything yet. As for finding a partner, I'm surprised how many of my friends are too scared to venture into RE investing even after I've assured them that reliable, licensed and reputable contractors can be found. So now I'm looking around here on BP and on Meetup to find someone who has some experience that'll be willing to partner with me somewhat as an apprentice.

If you happen to know of better lenders who don't require x amount of months of reserves and who might give a better interest rate based on an excellent credit score please let me know. I live in Atlanta if that matters. And while I'm asking favors, if you know of a GC who is used to being paid as the job progresses that'd be really helpful too. As you can imagine, I'd have very little left after paying down payments, closing costs and lender fees. A GC & crew that would get started and allow me to pay them weekly or as each stage of the rehab is completed would be a scenario that works better for me. **I do have a company that said they were ok with that pay structure for larger budgeted jobs, but I think it's always good to have a couple of options rather than just one.**

Thanks again for your experienced perspectives and offers to help!

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Alicia MarksPro Member

Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes

4y

A few things I have learned from doing my first HML deal.

1. You will need a decent amount of cash for closing costs, especially if you buy from a wholesaler who double closes (their initial closing costs and your closing costs both become your responsibility.)

2. Unless you are flipping and you are confident you can sell, loans have a "seasoning period" of usually 6 months, meaning that you can't take out a new loan or refinance within that period. There will be exceptions you can find, but it is a general rule.

3. Even if you have rehab costs rolled into your HML, you will initially be responsible for the rehab costs until you can show completion markers. A lot of people don't account for this or don't have credit lines to accommodate until your reimbursement request is completed. Especially being a person who keeps zero balance for mental happiness, this can be stressful. (Currently living this reality in a duplex rehab)

4. Can you find deals that fit in your market or somewhere with a trusted team?

I would say if you can JV or find a way to get experience to start that is the most secure way to get into RE. Also keeping in mind that since you are actively looking for a job, if you are hired that can be a stressful period where you have to shift your focus. The last thing you want is to have your hard earned savings tied up without the time to oversee it properly.

Good luck!

Craig Anderson

Investor · Member since 2020 · 204 posts · 92 votes

4y

Hey there Steven, I'm a little concerned on your numbers especially if you're getting a HML. If you're looking at $150K and $15K in rehab, and an ARV at $185K or so, then you will not be making any money on your deal after paying back most likely 12-15% HML. Plus, you have to factor in holding costs during rehab. You might need to rethink and recalculate your numbers so that you can make money off of a flip.

2 Reply

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

4y

@Alicia Marks, All extremely valid points and concerns you've laid out. You're totally right that if I find myself carrying cc balances, it would stress me out and I'd feel that much more of an urgency to see the property sell for a price that would allow me to completely pay those off in full.

You're also right about how stressed and distracted I'd be if I'm back to a 9-5 with a rehab going on and I'm not there to make sure time isn't being wasted. One of the job prospects that I think I'll get an offer from is a position I can work remotely which would be IDEAL!

I'm hopeful that this site and/or Meetup will connect me with someone to jv with. Let's see what the future brings!

Thanks for your experienced perspective and food for thought Alicia!

OP

New to Real Estate · Atlanta · Member since 2021 · 39 posts · 17 votes

4y

@Craig Anderson, Yep, you're right. Those *hopefully* are hypothetical numbers. While I have no wild dreams that my first project will net me six figures, I am hoping to be able to see my first profits pay my loan in full and any cc debt I might incur in the process. Modestly, if after these expenses I'm left with $15k or more then I'd still be encouraged. The experience and the working relationships with lenders, realtors and contractors are far more valuable at this point as you already know.

They say making your first million is the hardest. Well it seems that getting your first profitable fix & flip is the hardest for the first time RE investor/developer. I'm sure it gets at least a little bit smoother if not easier after the successful completion of your first project.

Thanks for sharing your insight with me Craig. Much appreciated!