How to start investing in real estate with little to no money?

14 Replies

I’m looking to invest in real estate. And I often hear from “gurus” that you do not need any more or great credit. However, I feel like there is something they are not telling us. Maybe they are just trying to pocket money for themselves selling “course training” material. I Came on this forum asking for help and just some advice on HOW TO DO IT!! Like what am I missing?

Well, you DO need money.  It just doesn't have to be YOUR money.

It can be money from a lender.  It can be money from a family member or friend.  It can be money from a partner.  It can be money taken from the seller's equity (seller financing).

There are lots of ways to get money...

Now, that said, it helps to have SOME money.  You will need enough money to do some marketing, and it's always helpful to have a down payment, even if it's small.  The more money you have, the easier it will be to get the rest.  A seasoned investor could do deals with absolutely no money at all, but a newbie probably won't be able to.

Here's a good resource:

https://www.biggerpockets.com/...

One way to get started is by wholesaling (which is the assignment of a contract) Once you have done several deals, gained some experience and have set aside some cash then you could try a flip or other strategies. For now I recommend you focus on getting really good at finding buyers and finding good deals.

First step is to make sure you understand the laws in your area regarding wholesaling which is the assignment of a contract and double closes. Several states have passed laws calling wholesaling brokering and are requiring a real estate license to wholesale.

You should talk to a real estate attorney or title company that works with investors in your area to ensure you are in compliance with any laws. They will also have the proper contracts as well.

Next you need to educate yourself on the business and your market. You really need to immerse yourself and learn all you can. Attend REI groups and meetups and network with other experienced investors.

Start with finding cash buyers. You want professional legitimate cash buyers so you know you can close on the deal and do what you tell the seller you will do. I can’t emphasize this point enough. You do not want to contract a property unless you know you can close it or take it down yourself.

Different types of cash buyers are flippers, buy and hold, subject to and lease option. You need to find several of each of these types of buyers and learn what they are looking for. You will learn a lot about the business and the market talking with cash buyers.

Best way to find cash buyers is networking at local REI meetups, masterminds, Facebook groups, Realtors, title companies, closing attorneys, property management companies, auctions, Craigslist, and bandit signs.

You can search real estate transactions in your tax database. Look for entities and individuals that have bought multiple properties. You may need to search by the address of the buyer as they may change their name or the name of the entity on each purchase. You can also buy lists from companies like list source and there are some REI software companies that have a cash buyer search feature.

Some of best ways to find motivated sellers is to purchase lists from companies like listsource and or compile lists from city and county like 60-90-120 days late on mortgage, pre-foreclosure, delinquent taxes, water cutoff, code violation, probate, divorce, etc. Then you can mail or cold call or both.

Other cheap or free methods are driving for dollars, craigslist, Realtors, FSBO sites, expired listings, foreclosure sites and bandit signs if allowed.

If you have the funds you can use billboards, newspaper ads, other offline publications., TV commercials, radio ads, motivated seller website, SEO, pay per click/adwords, facebook, Linkedin, Youtube, and other forms of online advertising and boosted/promoted social media postings.

Bottom line is consistency. You need to take consistent focused action every day, answer the phone when it rings and follow up and follow through.

Originally posted by @Ronny Batarseh :

I’m looking to invest in real estate. And I often hear from “gurus” that you do not need any more or great credit. However, I feel like there is something they are not telling us. Maybe they are just trying to pocket money for themselves selling “course training” material. I Came on this forum asking for help and just some advice on HOW TO DO IT!! Like what am I missing?

Gurus prey on the newbies and those desperate to find a new and lucrative career using real estate and they make it sound easy and that anybody drawing a breath can do it. They use these tactics to get you excited and purchase their “educational or training” programs which often don’t come cheap and then they regurgitate outdated or generalized info expecting anyone from anywhere to use that with success. This model is great for the guru, bad for you.

If it were that easy, everybody could and would do it. The fact is, it is not easy, though it is not rocket science either.

Pick a strategy that fits your goals, abilities, and strengths. Then study the ins and outs of that particular strategy and learn the market, build your team, and away you go. There is tons of free info on this site so I suggest you stay active and read as much as you can in the forums, ask questions (like you are here) and learn from others willing to help. There are hundreds of thousands of us here to do just that.

 

My cousin and I started with little to no money as well. I suggest just taking some time and picking up side hustles and just saving as hard as you possibly can. Once we budgeted and picked up side hustles, we're saving about 5-7K a month aside for real estate investing and it's been working out for us! 

@Ronny Batarseh Thankfully I'm a real estate agent and close about 30-32M per year in California so I was very comfortable with the offer process and negotiations. The hardest part was really getting the contractors and locking those down. Everyone talks about that and we completely misunderestimated that and got burned twice. 

I would run numbers on "potential" flips and estimate your own rehab costs, lender costs

And let it sell and double check it in a few months what it sells for.. This will give you the confidence that you're predicting the right prices.


Once you're confident with:

- Managing contractors

- Finding correct ARV (Confirm with local agents)

- Estimating Rehab Costs 

Then you should be good to go!

I'd study and get a base knowledge and maybe a mentor and that way once you DO have the money, you can jump right in without wasting anymore time

You lose more money by not participating than you do with calculated risks! 

@Ronny Batarseh I love what @J Scott said. 

You do need some kind of money to get started. 

The reality of it is you will also need knowledge, especially when dealing with other peoples' money. 

You don't need to buy any courses yet until you have exhausted the Internet of free information, which is kind of an impossibility, and by that time you should be able to differentiate the true coaches them from the marketing gurus. 

They key to managing contractors is a clearly defined scope of work, clear expectations of what you want and when you want it done and you as the investor control the budget by setting the price you are willing to pay for the work to be done. Once you establish your cost database you can tell the contractors what you will pay instead of waiting for bids and negotiating.  Even if you are turnkey with a GC you can still set the budget with them.

Originally posted by @Ronny Batarseh :

I’m looking to invest in real estate. And I often hear from “gurus” that you do not need any more or great credit. However, I feel like there is something they are not telling us. Maybe they are just trying to pocket money for themselves selling “course training” material. I Came on this forum asking for help and just some advice on HOW TO DO IT!! Like what am I missing?

 Ronny,

You can start with No money - that's how I started. I learned from one of the gurus but I overpaid for the properties (which is what I was taught) in exchange for being able to buy them with little to no money down and doing seller financing.

However, doing that proved to be not wise at all.

You need to buy a property right and having cash or access to cash enables you to do that.

I've since learned from that mistake. Don't get me wrong. You can buy properties no money down and make a lot of money doing so. Here's a recent example:
 
https://www.biggerpockets.com/forums/432/topics/746550-how-to-buy-a-41-unit-0-down-and-make-400k-profit

You can do marketing to attract sellers willing to walk away from their properties because they are going to be in foreclosure, or they are relocating, etc. Marketing takes money.

You can then take over the mortgage and buy the house "subject to". Or as others suggested, you can also wholesale properties but even then you need some money for marketing and earnest money.

So bottomline: you can acquire properties no money down but it's better to have money or access to money so you can enable yourself, to buy properties RIGHT.

@Ronny Batarseh . You have to have money of your own and financing this is the key. If you don’t have any money get your money up first then start going. Any lender is gonna require 20% or more for a down payment on an investment property. Now if you already have a home take a Heloc out on it and go at it.

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