What is the right way to get capital to buy real estate?

10 Replies

I am scrambling to come up with ideas to get capital to buy real estate to buy and hold and to use to create cash flow. There are so many who have talked about buying real estate with no money. I do not have money of my own to accomplish my goal. What sources of funding should I be looking at to purchase property that will bring in cash flow? I am only brainstorming with ideas. Those ideas include credit card ($4,000 credit limit). Yeah I know that's not much but a start possibly. The other is private lenders and hard money lenders. Hard money lenders require skin in the game, which I do not have that kind of skin in the game. Private lenders I am not all the way sure about but it is an option I am considering. I am losing patience trying to reach my goal. I am ready to take action right now and find some way to get capital I need to get where I need to be. I am just tired of waiting.

My HM lender only requires that I have enough money to pay 6 months of the short term loan. A lime of credit can count towards those payments. Might want to talk to yours a little more and see if they are the same.

Open an account with WF. Eventually you’ll probably be able to get an unsecured LoC with them. I’ve had move 12 months and I’m about to see if they’ll increase it b

@Bruce C. I have no lender or line of credit. Can unsecured line of credit be used to buy the rental property like I mentioned? I want to start small and move up to buying multiple rental properties too.

@Tony Marcelle

Yes, unsecured lines can be used if you have enough for the whole purchase. They can’t be used for a down payment on a loan. 

I should clarify that my HM lender only requires I have 6 months of payments on hand if purchase plus repairs is 70% ARV or less.

Best way: 

make money doing whatever your good at.

Then invest in real estate. 

Investing with “no money down” is nonsense bs.

If you have no Funds yourself, do not leverage your credit. That's how you lose your credit.

LOC are for people like myself and other experienced guys. For someone with no experience, it is a bad idea.

This is a long term game. Patience is required. 

I'm brand new to the Real Estate game as well, I don't have any properties and am still in debt so it may be a while for me to get started. I've learned a lot from reading "How to invest with no/low money down" by Brandon Turner, which can be found in the books section of BP. That's been a game changer and has opened my eyes to new possibilities but also helped me realize what kind of risk I'd be taking on when I begin myself. I would HIGHLY suggest getting started with that, if you haven't already. 

@Syed H.  My intention with the credit card was to use a balance transfer to deposit and withdraw cash out of my bank account rather than just charging money on the card itself or even a cash advance. The free balance transfer was my original plan on my $4,000 credit limit.

You need to flip a few deals before you should be concerned with cash flow. Otherwise you're going to trap yourself in a long-term deal. 

My advice to raise initial capital would be to find a good deal, put together a prospectus, and then approach friends / family with your business plan. Bring them in as JV partners pay them out first then re-invest your proceeds into another deal.

You can’t be a capitalist without some capital. Find ways to live on half of what you make. You’ll never get traction if you don’t.

 Owner occupant loans are the easiest to get and best terms.Once you have enough for a 3% down payment, buy a house. There are more and more 0% down loan programs coming back, so you could probably structure this purchase without any money. 

Rent out the rooms to cover the mortgage. Save the money you would've used to pay the mortgage. Buy another house the next year and do the same thing. Keep doing it as long as you can

If this is the only strategy you ever run, you'll be a millionaire in 15 years or less.

Tony, on top of what everyone else has said about saving up your own money, building up a track record before taking on others' capital, I'd diffidently add, "Be very freaking careful at this stage in the cycle."

This isn't a time to risk your financial life on using a credit card for down payment.