Beginners with No Money - How to Finance $5,000,000 in deals

23 Replies

I hope this info will impact at least one investor seeking direction on where to go for funding deals.

I've taken the next step in my business along the progression of the "Financial Path for Funding" as I like to call it. Looking back on where I started, I thought it might be valuable to provide a roadmap for newer people so that you can see each step and where it fits in to the bigger picture in terms of finding money for deals.       This is how I started with nothing (no credit, money, track record, or job) and did deals to get to the point where I have a portfolio at $5MM in value (which is a lot in a very inexpensive market).

I will say: This was MY path, and you don't have to do it like me. But I hope you get inspiration and clarity on YOUR path.      

  1. Wholesale 
    1. Build Cash/Experience. Cheap to pay earnest $.
  2. Wholetail
    1. Build Cash/Experience. Cheap to pay earnest $.
  3. Flip Mobile Homes for Cash
    1. Spend $5,000/deal
  4. Private Lenders on Flips
    1. Track Record starting to build up. Get Private lenders to believe in me. 
  5. Partnerships on Small Rentals
    1. Use partner's credit and $ and I do boots on ground work.
  6. Private Lenders on Small Rentals
    1. Started taking down my own rentals. I had to have a cushion for maintenance and vacancy built up.
  7. Hard Money Lenders on Flips
    1. With track record, more sophisticated lenders would take a chance on me.
  8. Refinance at Bank
    1. EUREKA! This was the big breakthrough.   Finally built up enough credit and most importantly CREDIBILITY. Hard money lenders said great things about me and that got me in the door at banks.
  9. Bank Loans for Rentals
    1. Access to bank financing opened up the floodgates & bought 50 units in 1 year.
  10. Small Unsecured Line of Credit at Bank
    1. Do deals faster. More competitive. They trust me to make good decisions.
  11. Portfolio Long Term Cash Out Refinance
    1. This is where I currently am. Going to close in 30 days. Non-recourse, 30 year debt at market rates. HUGE at improving cash in hand as well as cash flow. Protects my personal liability from my investments & protects me from rising interest rates with a locked in rate.

      FUTURE POSSIBLE STEPS:
  12. Portfolio Loans for Purchase
  13. Cross Collateralization Large Lines of Credit
  14. HELOC (Home Equity Line Of Credit)
    1. I still rent where I live haha. Most people will do this much earlier.
  15. Large Unsecured Line of Credit at Bank
  16. Syndicate Commercial Money with Private Lenders on Big Money Deals
  17. Unknown Unknowns

FYI I started out with $1,000 that I won from hitting a halfcourt shot at a Texas Tech Basketball game. I had nothing else except for sheer determination and a little bit of charisma. :D     Hopefully this helps at least one person.

@Austin Hughes man, that's awesome. Congrats on the success. I like the simple and logical breakdown of your progression. 

I keep forgetting about the affordability and ease of mobile homes. I might have to hit a few of them after I get the current project refi'd. 

Hey @Austin Hughes , thanks for sharing up to the current point in your continued journey. It's great to see for those of us just starting out. I'm switching over from a career in retail RE sales and the path that I've envisioned for myself looks somewhat similar to your own. 

When you were bootstrapping things on the wholesale side what were your first few lead gen sources? Right now, I'm focusing on sweat equity work (mainly driving for dollars). I'd be really interested to hear what your plan for execution was on the first few steps and how you progressed.

I love seeing the progression that people have. It makes the continued steps in the journey seem much more accessible.

Originally posted by @Noah Scott :

Hey @Austin Hughes, thanks for sharing up to the current point in your continued journey. It's great to see for those of us just starting out. I'm switching over from a career in retail RE sales and the path that I've envisioned for myself looks somewhat similar to your own. 

When you were bootstrapping things on the wholesale side what were your first few lead gen sources? Right now, I'm focusing on sweat equity work (mainly driving for dollars). I'd be really interested to hear what your plan for execution was on the first few steps and how you progressed.

I love seeing the progression that people have. It makes the continued steps in the journey seem much more accessible.

 The steps in your journey are very accessible! Build it up one block at a time... and for young guys like us, we need to let go of the idea of being ultra rich so fast. If you set out to do it and just built it up, it'll come as soon as you've proven yourself ready for it. :)

I highly recommend free sources to start. Your competition is lower. Many people like to move up in scale to paid marketing. So drive for dollars and maybe go after those same deal sources others are doing like pre-foreclosure and probate, but come at it with a personal touch (in person) that they can't duplicate or scale out. Being in person is your competitive advantage at this stage.



Originally posted by @Austin Hughes :

 The steps in your journey are very accessible! Build it up one block at a time... and for young guys like us, we need to let go of the idea of being ultra rich so fast. If you set out to do it and just built it up, it'll come as soon as you've proven yourself ready for it. :)

I highly recommend free sources to start. Your competition is lower. Many people like to move up in scale to paid marketing. So drive for dollars and maybe go after those same deal sources others are doing like pre-foreclosure and probate, but come at it with a personal touch (in person) that they can't duplicate or scale out. Being in person is your competitive advantage at this stage.

I agree with what you have to say. My goal is to do exactly as you said, build up one block at a time. My goal is to build sustainable and scalable wealth. I will be doing exactly as you mentioned, going after the more sweat equity options. I'm grateful that I've had experience in dealing with both buyers and sellers on the retail side, so being in person is not a huge dilemma.

Thanks for the guidance and advice my friend!

I’m very curious about the remodeling of mobile homes! Im going to look more into that...Thank You!

@Austin Hughes great info. Would you be willing to share the contact of your NR portfolio lender? We're approaching that phase since we have 8 conventional loans and are keeping one slot open for a  new personal residence.  LOL on the half court shot. Great story. 

Originally posted by @Samuel McQuinn :

@Austin Hughes Thanks for the great info! Awesome post. I've also played around with the idea of flipping mobile homes for some quick cash. Any quick tips on what to look for and how you made that as profitable as you did?

 I wouldn't expect "Quick Cash" because the low hanging fruit is older mobile homes.. and people buying those don't have large chunks of cash typically. So you'd have to do owner finance most of the time. I've sold 1 for cash and the rest with payments.

Originally posted by @Noah Scott :


Originally posted by @Austin Hughes:

 The steps in your journey are very accessible! Build it up one block at a time... and for young guys like us, we need to let go of the idea of being ultra rich so fast. If you set out to do it and just built it up, it'll come as soon as you've proven yourself ready for it. :)

I highly recommend free sources to start. Your competition is lower. Many people like to move up in scale to paid marketing. So drive for dollars and maybe go after those same deal sources others are doing like pre-foreclosure and probate, but come at it with a personal touch (in person) that they can't duplicate or scale out. Being in person is your competitive advantage at this stage.

I agree with what you have to say. My goal is to do exactly as you said, build up one block at a time. My goal is to build sustainable and scalable wealth. I will be doing exactly as you mentioned, going after the more sweat equity options. I'm grateful that I've had experience in dealing with both buyers and sellers on the retail side, so being in person is not a huge dilemma.

Thanks for the guidance and advice my friend!

 Yes you already know how to work well with people. You got it!

Originally posted by @Neil Pradhanang :

@Austin Hughes congrats! Love the breakdown of how you got to where you are. This is great motivation for anyone like me starting out in investing.

 Yes sir Neil! Of course there are a bunch of steps within each of them, but it's good to see that there's a clear path for a beginner like I was.

Originally posted by @Scott Sutherland :

@Austin Hughes great info. Would you be willing to share the contact of your NR portfolio lender? We're approaching that phase since we have 8 conventional loans and are keeping one slot open for a  new personal residence.  LOL on the half court shot. Great story. 

 Yes absolutely! I'll send you a message about that.

Yeah the first thing I did after I got the half court shot money was 1. Pay my mom back from borrowing money in high school and 2. Hire a VA to run my 1 month old business (since I had SOOO much knowledge and experience to train them with haha)

Originally posted by @Patrick Moore :

I’m very curious about the remodeling of mobile homes! Im going to look more into that...Thank You!

 Look into John Fedro's material. He's the best. And much of it is free.

Also, it's a good place to get your feet wet, because mobiles are very easy to do construction on, and the clients buying them are much more forgiving if things aren't perfect.

Originally posted by @Austin Hughes :

@Heath Ryans Thank you! 

I just circled back and made an offer on a mobile home this week too! They're great for idle cash.    And the competition for mobile homes is very, very low. :)

 I definitely agree! So far it's been a very profitable business for me. Thanks for sharing! :) 

Originally posted by @Don Gouge :

How did you overcome the Dodd/Frank law with financing mobile homes?

 I'm not a lawyer... but Texas Manufactured Housing just passed a law allowing a sort of lease option, but where it fully amortizes. That allows us to do that. There are a few other different ways to accomplish it too with just being listed as lien holder on the title and transferring title immediately.

Originally posted by @Rachel H. :
Originally posted by @Austin Hughes:

@Heath Ryans Thank you! 

I just circled back and made an offer on a mobile home this week too! They're great for idle cash.    And the competition for mobile homes is very, very low. :)

 I definitely agree! So far it's been a very profitable business for me. Thanks for sharing! :) 

 I'm glad to hear that you've had success with mobile homes! The only part I don't like about Texas is having to get (and renew) a license lol.