Investing With No Money Down: Are You Ready for the Terrible Truth?


“How can I get started in Real Estate Investing if I don’t have any money?”

It’s a common question on BiggerPockets. I’m going to answer it for you right now:

You can’t.

That’s it — it’s that simple. You cannot invest in Real Estate with no money down. It is impossible; in fact, it is antithetical (big word) to the definition of “investment.”

“But what about wholesalers? What about Brandon Turner?”

They didn’t get started by “investing!”

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The Difference Between Investing and Building a Business

Brandon Turner didn’t acquire his first dozen — or even his first 40 properties — by investing. He acquired them through hard work, dedication, and by building an awesome network of individuals with which he connected in complicated and lucrative ways. (To learn more about Brandon’s journey, check out BiggerPockets Podcast Show 92 and get The Book on Investing in Real Estate with No (and Low) Money Down today)

Related: Is it Really Necessary to Make a Down Payment?

He didn’t invest money. He built a business. If you want to call that investing, I suppose that it’s possible to define it as an “investment of time,” but in the real world, we call that “working.”

For many readers, building that type of business is not a good use of time. It just isn’t worth most Americans’ time to go out, find deals that no one else can, and sell those leads for cash or equity in a property. This kind of work requires a marketable skill set, after all. You will compete with others just like you would with any other skill in any other industry.

I personally believe that most readers are just as well off continuing to apply their current professional skill set and instead working with wholesalers and agents to buy investment properties with the cash generated from their profession. Why would you leave your current profession for one that is just as competitive — and where you likely have to start from a position of inexperience?

I’m not saying it can’t be done, but I am saying that wholesaling or flipping — which in the end are pretty much what investing with no money down boil down to — are laborious skills that need to be developed and honed over a professional career. It is a job and should be treated as such. Brandon, instead of being paid cash for finding and selling deals to investors, was paid in equity in many cases.

The Hard Truth About Getting Started Investing in Real Estate

So how do I suggest that most readers get started investing in Real Estate?

Here’s a hard truth: in order to invest in real estate, you need to first generate a significant amount of money to invest. I’m not talking about millions, but for most of us, probably somewhere on the neighborhood of at least $20,000 is going to be needed to make most investments — perhaps $10,000 for very low income housing. Again, this isn’t the case for everyone (we’ve seen examples of everything on BiggerPockets!), but for most of us, in order to truly “invest” and not “work,” you are going to need that sizable chunk of money to put down.

Let’s look at an example that might apply to many readers:

Suppose your goal is to build a rental portfolio. Specifically, your goal is to have $20,000 in equity in a first property that nets $200 per month in cash flow for you — probably an investment that a lot of BP readers would say is decent for a first investment. Let’s also pretend that you are a skilled worker and make about $50,000 per year.

If the goal is to get to $20,000 in equity in that property, do you think that you are more likely to accumulate that kind of money by keeping your job, increasing your savings rate, and applying your skill set towards freelance or overtime pay, or by developing an entirely new business? I’d stay with my job all day; in fact, I pointed out a few strategies that might help in generating that kind of savings rate in my article last week.

On the other hand, if you quit your job to wholesale, or even work as a wholesaler on the side, you will face difficulties that I would argue just aren’t worth the time for most skilled professionals. You go from a skilled worker to a completely novice wholesaler. Wholesaling is not an easy task, and it’s not something that most people are successful at.

To be a successful wholesaler, you need to develop a business, complete with systems and strategies. You’ll need to become an expert in your local market, in estimating rehab costs, and in negotiating with motivated sellers. You’ll need to develop relationships with lawyers, accountants, and buyers, and you’ll need to spend serious time or money on marketing. If you can do all that successfully, I’d argue that you can build a successful business in many industries!

Why not stick with the one that you are already in? I’d also apply the same thinking to fix and flippers.

Related: Money Myths and the Biggest Mistakes I’ve Made Raising Capital

On the other hand, I believe that focusing that same time and energy on saving your income and earning some extra money on the side with your current profession is a far more achievable task. Then you can take that $20,000 or so that you’ve accumulated and invest in a turnkey property, which you can purchase from the experienced wholesaler who put in the skilled work needed to find that property!

Of course, real estate investing (buy and hold, for example) is still a time-consuming process that requires time and energy, but I’d argue that landlording and managing properties is a far less time-consuming business than wholesaling. There’s a reason there are millions of successful landlords managing property on the side, but only a handful of successful wholesalers and flippers!


No Money Ad 300x250 FinalReal Estate is certainly a powerful way to build wealth, if not the most powerful means for many of us. I firmly believe that anyone who has ambitions to build a sizable net worth should make regular, intelligent investments in Real Estate.

BUT I think that a ton of new investors forget that they can’t make an investment without something of value to bring to the deal. For the vast majority of us, that something of value is going to be money, not time.

What do you think? Is the concept of investing with no money down a myth? 

Leave me a comment below!

About Author

Scott Trench

A longtime fan of BiggerPockets and a Real Estate Investor managing his first property, Scott is the company’s Director of Operations. BiggerPockets is a BIG website, and Scott’s background in finance and big data analysis will be instrumental in the next phases of company growth and in helping to bring the resources of BiggerPockets to more investors worldwide. Scott is passionate about helping others build wealth and serving his community in whatever ways he can. In his spare time, Scott enjoys skiing, biking, and cooking, and he is a lifelong rugger.


  1. Thank you. Real estate is wealth preservation. If you do not have any money what are you persevering? Easiest way work two years get a FHA 3.5% down on a duplex preferably a fourplex and you are rolling. Cheap 30-50k housing until you can get more multifamily properties or find a partner. Don’t make it hard.

  2. GREAT article, Scott. After reading many books, trying a few side-businesses, I’m convinced that the most efficient way to save money for investments is working a J-O-B- and if you want to do it faster, adding on a part-time J-O-B.

    Authors make starting a business, flipping a house, etc. seem like a piece of cake but any business owner knows that making/selling a product is just the tip of the iceberg (marketing, strategy, etc.).

    I’ve really come full circle to recognize the brilliance of Adam Smith- specialization (ie in doing one small part in a full-time or part-time job) is so much more productive (for you and everyone) than trying to run multiple businesses.

    • Scott Trench

      Thank you for the support Brett! I certainly agree with you and your line of thinking. I specialize in finance and data analysis. I’m sure that I can use those skill sets to help BiggerPockets grow bigger and better. I’m not so sure that they help me build an awesome wholesaling or flipping business.

      • Ray H.

        Scott, those skills you mentioned are incredibly important to wholesale, buy and hold, or fix and flip. Data analysis is the part a lot of people don’t do or understand. As a finance specialist, you can understand loans, structuring deals, and analyze a property’s profitability. Now just add in the wholesale fee and all you need to do is find a property. That is the other challenging part but one that can be achieved. Partner with someone who knows little about finance but can talk to people and build rapport and you have a nice little power team ready to wholesale. No money? Knock on doors. Limited funds? Direct mail specific properties. Post ghost ads on CL or call people posting on CL to build the buyers list. Meet others at REIAs. The steps are easy, but it’s all about executing. It would probably take 6-12 months to do the steps noted above and get some momentum going. But it can be done. Brett is completely right that having your own business has its challenges and is not as easy as others describe it.

  3. Jeff Rabinowitz

    How does a wannabe real estate investor get such a firm grasp on the “truth” before they have actually done anything? I know many investors who do various deals without any money out of their pocket. They do this by investing their time and knowledge (actually, the most skilled investors do not even need to invest much time anymore as they have set up systems which regularly attract deals to them). Some of these deals are rental properties which they hold long term, some are fix and flips, some are wholesales.

    It is not that hard to attract financing if you invest time and knowledge to find great deals. I know this because I have funded deals like this. I have not personally done a no money down deal but I have purchased several rental properties which I refinanced within months of purchase and drew out more cash than I had invested. One of those required no rehab at all (I still own that one). Another just required a major clean up and spruce up.

    I know you are attempting to appeal to novice investors (like yourself) and to solicit comments by making controversial statements but you are just as likely to drive away experienced investors if you do this too frequently. Since Josh is enjoying the show you clearly have his blessing. I would caution you to rethink the strategy.

    • I agree with Jeff.

      This article is so full of dogmatism that I almost couldn’t finish it. I kept waiting for some “psych!” or “gotcha” statement to appear, but it never did. I done several no money down fix and flip or fix and rent houses. I’m currently working with a banker to construct an office with two apartments built inside valued at about 300k for NO cash out of pocket. Investing without cash can and is being done. I’m sure I’m not alone. An excellent credit score and income are, of course, helpful.

      The one who dogmatically claims it can’t be done is surpassed by the one doing it.

      • Scott Trench


        Thanks for the feedback. It helps me become a better writer when readers like yourself point out things you don’t like. As for your comment – I’m sure that you are an excellent rehabber and that you have built a great reputation around your business to get the awesome deal you described. Having unsuccessfully tried to do that with far simpler properties, I believe that it’s not the best way to get started. It was quite literally learning a new business.

        • Hi Scott, very interesting article. I have to agree with Jeff and Curtis. I am a new investor here in Atlanta. I moved here, taking a voluntary demotion and pay-cut to come here, for a better opportunity for my business. I discovered Flipping once I got here and was hooked. I started 3 months ago and have a list of 19 buyers and my first house that I plan to flip to one of them. I got it with no money down because I asked the right questions and established rapport with the seller. But to be fair I have invested $300 in a Real Estate computer program that taught me how to establish rapport and creates systems, I have also gone to free seminars during that 3 month period because I realized that building any business is easier if you have the proper information, motivation and support team. I have a mentor that I got from attending networking events. So it can be done if you have the right motivation to learn and implement action. Since Real Estate is the best wealth builder I had to get involved. But it all starts with the act of believing that it can be done. I am dreaming….no…I am believing BIG.

    • Scott Trench

      Jeff – Your right about the title there. Perhaps I shouldn’t have used truth that way.

      Thanks for the straightforward feedback.

      As a young professional who toyed with the idea of rapidly building a portfolio, I found a steep learning curve. Finding properties in my market has been difficult and it has been a long and difficult process get going – until I just decided to start simply with an owner occupied duplex. I thought this situation allowed me to speak frankly about the difficulties I found in switching professions. Perhaps I needed to make that more clear.

      I certainly am attempting to appeal to novice investors and solicit feedback. I am a novice myself after all, and have difficulty providing real value to experienced professionals like yourself!

  4. I invested absolutely NOTHING, no money, no time and no effort, on my first rental. Long story short, 100% seller financing, $30,000 sales price, rented at $500 a month. I even had to borrow money for carpet and paint. The seller contacted my father, who was a Broker and my father brought it to me. I was a full time college student at the time. My father had never contacted the seller either. The seller got my fathers name from a past client of my father’s.

    • Mike, your comment just re-enforces the point made in this article. This first deal didnt fall on you from the sky. Your dad with his business network and hard work for 20-30 years made it happen. He put his time and efforts to make it happen, even not a direct investment.

      • Mike McKinzie

        Vadim, networking is always an asset whether selling Tupperware or eight digit commercial property. My only point is that there are no money down deals to be made. Some may require extensive work and some may require little to no work. You could be washing your car in your driveway and your neighbor walks up to you saying he is selling a free and clear rental, ,and wants to carry the note. Or you may send 100,000 yellow letters before you find a deal. As an investor, I love to challenge when someone says “never” or “no way.”

        • Scott Trench

          Mike – I tried not to suggest that the no money down game is impossible. I’m instead suggesting that it is not a high yield return per the effort involved.

          Of course if an opportunity presents itself, anyone and everyone should jump on the opportunity! If I were offered an awesome deal from a friend or family member with no money down I would jump all over it. No arguments there!

  5. Mike Sumsky

    While I agree with the stance that most newbies underestimate the time and energy needed to be successful in this business, I do believe this business can be completely funded with OPM. I feel developing the skill to find off-market deals at a discount is far more important than saving $20k or more to put into a piece of real estate. The investment doesn’t care where the cash comes from.

    • Scott Trench

      Mike thanks for the feedback. Where I disagree with you is in timeline I think. Perhaps it makes a lot of sense to develop the skill set to acquire properties with no money down. But, to me it makes more sense to buy a few owner – occupied places slowly over the next three years and then when I can show some positive returns from those investments try to invest with other people’s money.

      I think that’s a safer, better risk adjusted return on my time and efforts than jumping feet first into the no money down business.

  6. Kevin Siedlecki on

    Everyone here has good points. The disagreement comes down to the definition of “investing.” What Scott is saying here is a common point on the BP podcasts: flipping, wholesaling, and raising capital with which to make purchases are work-intensive sources of income. Doing those things can be a good way to make significant money, but that’s not investing; it’s working.

    • Scott Trench

      Kevin – 100% agreement. The question then becomes – what is the best total return on my working hours? Is it Real Estate? Or is it something else. I’d argue that for most people it’s probably an application of their professional skill set and not a totally new profession like Wholesaling or Flipping.

    • Scott Trench

      Sarah – that’s a very different mindset than mine. As a novice investor not only do I think it would be tough to get 100% financing from a private lender, but I also would be very uncomfortable morally putting someone else’s capital at risk in an investment that I am totally new to.

      • Gary Alford

        Scott Looking at the way you view things I would honestly say that investing might not really be for you. Every investment you make is a risk it is about creatively coming up with ways to manage and lower them and make the deal work for you. As far as for ROI I do not know about you but most people are not bringing in 20k in as little as 4 months on their regular jobs. If it cost you 2k in advertising and some time you otherwise would have spent playing video games or watching TV to get that one deal I think it is a pretty good return on investment. Wouldn’t you say! Great article from the aspect as most people think it’s a lot easier than it is but that’s mostly the fault of all these guru’s selling dreams. I say get out here and keep talking to all these lenders and build some thicker skin because you could go through a lot of them before you find one that’s willing to give some terms you are both comfortable with.

  7. Matt Lavinder

    More truthful words have never been posted. My business will flip 25 houses in ’14, but it’s been (and is) a full time job every step of the way. You might luck into a property or be gifted one by a parent. But, the one thing I’ve learned is that cash is king in real estate. Other people will invest in a house or two, but they won’t pay for your marketing (3k/mnth) or insurance costs. And, they won’t throw you money when you have to unexpectedly replace a heat pump. You can get lucky on one or two, but you’ll need money to make it a sustainable business. Keep the day job, save money, and invest it in real estate.

  8. Nicole Starnes

    “Investing” doesn’t always involve money. The argument is on the definition of “investing” and the definition of “work”. Even if you put your own money into a property, you’re still doing “work” on your investment. The type of work is different depending on how you invest. Buy/hold, you’re doing the “work” of finding a property to “invest” in, finding a tenant, keeping up on the property, collecting rent, etc… Either way you look at it, unless you only put up the money and then sit back and smile (there are systems that allow for this btw), you’re going to “work” at it. No money down deals require you to be more creative but if the outcome is making more money, it’s considered an investment no matter WHAT you invest.

    Business owners “work” for themselves. “Work” is required in anything you do whether it be physical or mental or whether you’re “working” for yourself or someone else. You can’t say that someone who puts up something (whether that’s time, someone else’s money, or their own money to make money in real estate) is not a real estate investor. Anything that you put in for a reward is an investment and makes you….an investor.

    Just because YOU haven’t made no money down work for YOU that doesn’t mean that it’s impossible. If you look around, you’ll find a whole sea of investors who have done just that quite successfully. There’s more than one way to invest in real estate and not everyone starts out by saving 10k – 20k.

    • Scott Trench

      Nicole thank you for your reply. I actually agree with every single point you make.

      If you define work as a form of investing, then the next question becomes “What is the highest return per time spent working?” I simply argue that for most people, the highest yield is by continuing to work and develop their professional skill set, and not start as a novice in the no money down real estate investing game. I’ve tried not to suggest that the no money down game is impossible, I’m instead suggesting that it’s not a good use of time if you already have a solid skill set. I prefer to play on my strengths and passions than to shore up my weaknesses or become a jack of all trades.

  9. Matt R.

    Is it impossible to get zero down seller financing? Some markets with few interested buyers these deals become easier to aquire. Try that move in a hot market and the rarity becomes the norm. In certain markets 30k houses are borderline investments with very motivated sellers hoping to get out from high property tax bills, vacanies and the rest. If you are in one of those markets anything goes and usually does. I would like to see geoghraphical data on per capita seller financing. That way one could know the odds of getting seller financing in their market and allocate efforts accordingly. Thanks, Matt

  10. Marlene D'Souza

    I agree with Scott, I get this same questions from friends and family and clients, I tell them all there is no such thing as no money down. There will be some money pass across the table at some point during the transaction. The closes that I’ve come to no money down was due to a fluke in the property taxes which caused a credit and we wound up walking away with $42.00 bucks. Other than that we have always came in with some cash.

    • Scott Trench

      Marlene – Thank you for the support!

      As an inexperienced investor myself, I’m only guessing here, but I would imagine that most of the great no money down deals come from either a close personal relationship, or are a result of previous success. If I were to sell a property, for example, I would be very comfortable with no money down for a seasoned pro, but not so much for a newbie.

      This is why I think its particularly difficult for novice investors to build a strong business in this industry.

  11. The word “invest” means according to webster –
    1: to commit (money) in order to earn a financial return
    2: to make use of for future benefits or advantages
    3: to involve or engage especially emotionally

    If you want MASTERY in real estate, you will have a well rounded education not only in money (financial planning, estate planning, retirement planning, etc); title (anything a title co deals in, learning escrow procedures); learning Self Directed IRAs; learning JV Partnerships; learning syndications; learning negotiation and sales; learning landlord tenant law, etc.

    In the book Outliers, author Malcolm Gladwell says that it takes roughly ten thousand hours of practice to achieve mastery in a field.

    If you walked through 100 “for sale” houses and tracked them as to the price and terms to what they actually sold for, you would get market knowledge, INVALUBLE market knowledge. And who the real players are (eg agents, title companies, etc).

    Do you really want to invest that time and focused energy? IMHO 99% want things fast and easy. “Push Button”. That is why seminars use sophisticated psychology to get you to “Act Now” and use scarcity that this “done for you system” will not last long.

    My first deal 1986 was hard money and I netted $16,000 cash on a rehab. I had a coach and I was scared to death. But I faced the fear and did it anyway. NO MONEY DOWN.

    Do the work to learn; read and read some more. Be patient. Network. Be a “win win or dont do it” kind of person. Say what you mean and mean what you say. And deliver on your word even if it hurts your profit.

    • Scott Trench

      Brian – thanks for the comment. I would argue that getting to the 10,000 hour mark in any industry sets you up for success. As a finance and data analyst by trade, I am probably halfway to that mark in my profession. I would have to start over completely to get to that 10,000 hour mark in Real Estate. I just currently believe that I’m better off financially sticking to my trade full time, and investing part time in a more traditional way.

  12. Scott, that was a much needed alternative point of view on the “get rich quick just like me” fairy tale. I can’t agree with you more on your stand for keeping the professional job and having the real estate investing as a side project until you are ready to become more serious about it. It’s strange how everyone reads your message as zero down deals don’t exist. Of course they do. Those deals are just so much more accessible when you already have knowledge of all ins and outs of the market and built up some basis to make it happen. I think your point is so crisp clear and very rational. Putting efforts into the area of your primary expertise may produce a better ROI (your time for that matter) and enough for the downpayment. By chasing after those zero down seller financed all-around-glorious ways to invest a new investor can find themselves in hot water competing with more equipped local experts.

  13. Great article. To me it spoke to the rule and not the exception. Yes we all can get lucky and find a no money down on a deal or two, but it is not the norm. I think you offered some real sage advice for those that are willing to listen. Line upon line and you can build. Taking short cuts most times turns out to be the long way. A harsh reality is better than a false hope.

  14. Scott, thank you..This article is a breath of fresh air amidst all the “gurus” hyping “no money down” deals and talking about how wholesaling is “so easy, a 2nd grader can do it”….

    BIGGER POCKETS needs more sobering articles like this..Great job!

  15. Great point of view Scott. The real estate pro’s who retire and spend the day cruising around and checking up on their 15 flips, are of course a type of business rock-star. With all the infomercials and seminars that promise easy entry into the real estate space, this article gives a much more realistic view for a great many of us.

    • Scott Trench

      Thanks Okenna – yes I think that you nailed with this statement “a type of business rock-star”. They built up excellent systems that produce tremendous profits. It’s a business skillset, and I’d bet that most of them could have been similarly successful in many industries.

      As I consider myself to be a young and unskilled investor, building a business in Real Estate as rapidly as possible with no money down, seems to a be a difficult and impractical goal. I’d much rather invest slowly and passively.

  16. Brandon Turner

    I love this debate, Scott! And yes, I agree that for most people, “no money down” is probably difficult and when it can be found, it’s not really an investment. But like others have said – it all comes down to definitions. Is what I’ve done investing? or a business? Or both? I like to think that the phrase “investing in real estate,” in the way BP and myself often use it, is not the same use of “invest” as if someone was saying “I invest in stocks.” If that makes sense. The phrase “Invest in real estate” is more akin to the idea of “I engage in the business of real estate and make money for my future through that asset class” and so, at least in that regard, it is possible to invest with no money down. But it’s not the same as investing in stocks with no money down.

    Anyways, I appreciate the article and the debate of course! Keep up the good work sir!

  17. John C.

    Hi Scott – great post! You make an important distinction between “investing” and “building a business.”I live in San Diego and work in software sales. When my schedule permits.. I key an eye out for opportunities to buy, renovate, and rent (long term holds). While this requires a good amount of work — after the initial renovation they’re mostly on auto-pilot… and having the income from my software career allows me to be more “independent” as an investor.As I see it.. if moving into real estate full time requires 40 hrs a week (or more) ..I can’t look at it as anything other than a “different” job. Your key message is correct. It’s important to contrast what you have with the risks and potential rewards before considering whether to making real estate a full time gig.

    • Scott Trench

      John – thank you for the feedback and support! I agree with your thoughts on this and feel that income from a day job is a great way to get started in Real Estate. I think that going into Real Estate full time is probably best attempted after investors have had some success in more traditional part time investments, perhaps with owner-occupied residences.

  18. Matt R.

    Even Brian’s 1986 example is not a no money down deal in my mind. Hard money is others peeps money thats closer but no cigar…and if something went wrong….you know there is no walking away there. Lets see a zero down seller financing in Los Angeles type A hood, B home example and not from the 80s:) Does this exist? Thanks, Matt

    • Scott Trench

      Matt – thanks for the comment. Yes – investing with no money down inevitably means using someone else’s money. I’d point out that there are two reasons that using other people’s money is particularly difficult for newbies:

      1) Newbies have no reputation to convince lenders that they can make the deal work
      2) Newbies lack experience. Personally, I would feel morally questionable putting someone else’s capital at risk in an investing environment I have never participated in.

  19. Cory Binsfield

    Before I owned real estate, I believed in the no money down fairy.

    As I look back as my first investment, it became clear that the seller would have never accepted my offer if it was zero down. You need skin in the game to be considered a credible buyer.

    Once you gain experience and a reputation for closing deals, you will find it easier to do a “no money down” deal. Yet, why not give yourself permission to succeed and simply go after small money down deals since they are waaaaaay more plentiful then the rare no money down deals?

    In my opinion, the best way to get started is focus on getting or maintaining a decent job and then take all your profits from the job and reinvest in real estate. I call this recycling your money.

    Once you have your first property, take it easy and learn the art of landlording. If you like it, 10x it. If you don’t, try another path to success. Just make sure you always have a side hustle going to ensure you don’t have to rely on your employer for survival.

    The easiest way to get started is by hacking your housing. I wish I knew I could have purchased a 4 Plex with a FHA first time home buyer loan with next to nothing down. It would have definitely accelerated my journey.

    • Scott Trench

      Cory – thanks for your comment. I agree with the recycling your money strategy – its exactly the approach I’m taking. I am also applying the low money down strategy by buying my first duplex with FHA financing as an owner-occupier. I think its the optimal way for me to get my feet wet in real estate. If things go well, and I’m able to find success, I hope that in the course of a lifetime of investing, a few no money down deals may materialize.

  20. I don’t normally post on here. But I’ve been thinking about writing all day and so I am. I’m not a big fan of absolutes. If you don’t know what I mean I’m referring to your “you can’t statement”. I do understand the message here and I guess who it might be geared to… maybe? But more than anything I can’t help but feel the purpose of your article is to “stir things up” so as to create exposure for yourself. Josh is even ready to be entertained with his popcorn! And maybe market Brandon’s book?? As someone noted, watch out for turning off the more seasoned investors. I actually over heard a similar comment last week regarding BP from another seasoned investor. As far as us “newbies” some of us have good heads on our shoulders believe it or not. It is a hard road, real estate investing, growing your real estate business, whatever you want to call it. We need support not negativity. So maybe you should watch out with us “want to be investors”, too? We may get turned off and not want to dish out that $20 a month for self-promoting defeatist opinions, but instead “save” that money for investing! I don’t know…. I’m certainty left with a “yucky” feeling. But then what do I know? I’ve not done rehabs yet nor do I own buy and holds. I just have my 4 wholesaling deals with NO money down in less than 2 months behind me, Thank you for reminding me how fortunate I am to have people in my life that believe in me and offer the support I so desperately need.

    • Scott Trench

      Marina – I definitely don’t want to take away from your success. Of course I want to stir up controversy and get feedback with my posts. I want to encourage discussion and make readers think about things differently. I think that there are plenty of readers who were upset with the message of this article, but just as many if not more who found some value or wisdom in it. That’s at least what I infer from the other comments!

      I wish you the best of luck, and it sounds like you are on the path to becoming a successful wholesaler. Good for you! I tried not to claim that it is impossible, just that its not really “investing” and that it is a full time job. With four successful deals in 2 months, I’m sure you are realizing the hard work that goes into getting those deals! Congrats!

  21. Jordan Thibodeau

    Great post Trench.

    Real estate valued properly with a down payment provides you with a margin of safety which increases the probability of surviving market shocks to gain the needed experience to grow your portfolio. Too many people over leverage themselves or get “Real Estate Fever” leading to unchecked greed, rash decisions, and failure.

    People forget the market circumstances of when they purchased their RE. When housing prices bottomed, anyone could go all in and look like a genius, but what happened to those same people who went all in 2006?

    While we might celebrate those who go “all in” and win in any endeavor, we unfortunately don’t celebrate the millions who fail.

    When I see others talking about leveraging to the hilt, not only do I cringe, it explains to me why we always have market cycles and how the masses will fall prey to group think leading to the next bubble.

    Save your money, learn about RE, set limits to your portfolio growth, and don’t be fooled by the charlatans in the industry..become wealthy slowly.

    • Scott Trench

      Jordan – I love the “Great Post Trench.” comment – reminds me of high school sports days haha.

      Couldn’t agree more with your strategy, its exactly what I’m trying to do here. I think that leveraging too much is a huge risk, and while an FHA loan is huge leverage in one sense of the word, its also an expense that I can easily cover given my current income. In the absolute worst case scenario, I’m stuck with an expense that I can cover.

  22. Matt R.

    I found this out Scott.
    Top 10 states for seller financing.
    Texas 21%
    Califronia 10%
    note these are the two most populated state I think.
    Florida…… is up there too.
    North Carolina
    Washington State
    It looks like a west coast deal. But there is a ton of rural on the west coast.

  23. Dave Visaya

    Great post and it really depends on perspectives and word play. Those who acts always get ahead and always get the results. This post reminds of a quote by Lincoln: “Things may come to those who wait, but only the things left by those who hustle.”

    I say never give up people and there are only lessons to learn, well, as long as you act though. 🙂

    • Scott Trench

      Thanks Dave! Action is definitely better than inaction – however, I choose to act by making a traditional and passive side investment in an owner-occupied duplex, rather than through the potentially far more difficult and time consuming process of hunting for those elusive no money down deals.

  24. I think you are wrong in some aspects of what you said, but the reality of investing with no money down is much closer to what you said than the gurus who say it is easy. Also, if you consider the median income in this country, and what one usually has to do to earn a decent salary, REI as a job is not such a bad thing for many people.

    One aspect you disregard is that no to low money down deals can actually be quite profitable, just not for short term profit. A good deal, in a good location, with room for improvement can create a situation where the tenant(s) pay for the property, and your “work” then creates additional profit. That IS investing, using rent payments to create long term profits. Yes, it is somewhat a job also, but when done intelligently it can pay far more than most people’s jobs. The caveat being that it does take patience, experience and knowledge. That is where most falter, they expect REI to be fast and easy money, and it is far from either.

    And yes, having cash to invest makes it oh so much easier to do.

    • Scott Trench

      Walt – thanks for pointing out some of the problems in my writing – that criticism helps me get better! I’m glad that you agreed with my overall message though.

      I’m in agreement that the no money down deals can be extremely profitable. I don’t question the wisdom on jumping on deals that come to you that you can make extremely profitable with minimal work, I question that the process of finding those great deals is worth the time. It seems like you either have to be lucky or a seasoned veteran.

  25. I really want to thank you for this article. I’ve *almost been pushed/bullied/coerced/brainwashed by multiple real estate gurus into this industry. I’d considered diving into the profession full-time to make wealth work. The problem is, I have a lot of debt, and deep down I know it’s not just unrealistic for me, but potentially financially devastating.

    I have a better job now, and while it’s not my dream job I earn enough to cover my living expenses and my bills. I’ve changed my lifestyle to me a lot more frugal. I make a lot of extra payments on my debts, and in a few years, those debts will be gone and I will be able to start saving for investments instead.

    I really appreciate the honesty of this article. Some people just don’t have the time/money/talent/resources to be a star at this right away. I’m finally to the point that I feel confident about my slower path to real estate investing. I look forward to it.

  26. Michael Petrovich

    Scott, This article definitely resonated with me and I am glad to have read it – Tah k you! I’ve thought the same for years and kept my passion for REI for a future planned date, seing the sense in going in with something to offer – cash. I started 2 separate companies with the sole purpose of earning extra income and saving it towards real estate. I also noticed that my spending habits were off the walls, so I made myself correct those issues – and I still have plenty more to learn. Keeping my job and extra earnings on the side will help me increase yearly savings… Coupled with REI, I feel comfortable that I may get to a comfortable financial spot sooner rather than later. Do I want to work for a company?… Heck no… But it’s a small price to pay for the short term.

    • Scott Trench

      Michael, I think that you have a great approach here. Thanks for the support! I think that working hard at your skilled profession and increasing your savings rate may be one of the best ways to get started investing in Real Estate. As you build a portfolio over the next few years, you may find that you are able to make amazing profits on your investments part time! If that is the case, that may be the time when you decide to switch over to a full time real estate business.

    • Scott Trench

      Patrick – this might be a really good topic to discuss in the forums. I’m actually not sure how to help you with that one! I’d encourage you to start a discussion on that topic to get some great feedback from members with more experience than I.

  27. Ben Leybovich

    Scott – Josh hired you, which means you are not stupid. Brandon like you, which means you are not an ass. All of this combined means that I feel rather confident saying the following:

    1 year of you doing everything exactly as I tell you, and you’ll buy your first investment property with no money – period 🙂

    Ask those boys – they’ll tell you I’m right. Then may be, just may be, in lieu of analyzing other people’s money you can start counting your own…

    Every step of the way they told me – you can’t do that; it’ll never work. Now you are telling me the same. The difference is that now instead of only having faith, I also have a track record. Investing, as you see it, is nothing but money preservation play. That’s fine – I have no issues with preserving buying power of wealth created elsewhere, though in RE it hardly ever works out exactly right. However, sophisticated pros do not do that – we create wealth out of thin air, and we automate the process to boot 🙂

    Nice to read your thoughts. Brandon was right – you do have potential. Get a little uncomfortable and you might do some great things (just don’;t listen to Brandon too much).

    • Scott Trench

      Ben – thanks for your reply! I very much enjoy your articles throughout the blog and know that I have a lot to learn. I think that I just enjoy working at BiggerPockets more than I would enjoy working on creating wealth out of thin air through Real Estate. I think that even more magic happens here and that its a better way for me to generate wealth than learning another form of wealth creation like No Money Down Investing.

      I’m sure that it’s possible to buy an investment property with no money down in the next year, but if I focus on growing BP and saving my pennies, I think that I’ll be able to focus on what I’m good at here at BiggerPockets, and have a second investment property in one year just the same!

  28. Marcus Maloney

    Great article, I completely agree that investing with no money down is a myth. At some point you will need some capital to build your business. I often advise those that are looking to start wholesaling to keep your day job as well because wholesaling is very difficult and there are a lot of moving parts.

    Very well put

    “Enjoying the Journey”

  29. Daren H.

    When I read or hear people talk about “no money down” or “none of my own” cash in the deal, I immediately think of the following:

    What do these people invest their money in if not RE? If REI is your expertise and you are great at producing high returns, why the reluctance to put some of your own money in it? On the surface, it seems somewhat hypocritical IMO to ask others to invest their cash with you but you won’t invest your own cash when you are suppose to be the REI expert.

    Do most people who pursue this strategy do so because they really do not have money?

    It sounds like it is a great gig if you can consistently buy without money but I am still curious about where these type of REIs invest their money.

    • Scott Trench

      Daren – that’s a good point. At some point you’d think that no money down investors would reinvest their cashflow from their properties in Real Estate. BUT, maybe a lot of the no money down investors see their cashflow as a way to expand their lifestyle expenses. Interesting concept.

    • Daren, I can answer that one for you. They invest it in real estate they WANT to OWN. Theoretically, we use OPMs and No Money Down deals to temporarily control property that we can either a) resell or b)mamke a monthly income off of. The intent is to basically continually control property until we can BUY a property or 500 properties that turn us good positive monthly cash flows, are low to no maintenance and maintain solid rental history providing our successful monthly cash flow. Effectively removing us from the proverbial Ratrace.

  30. Jennifer Tornus

    When looking to purchase my first property, I DID know I could use an FHA loan for up to a 4-plex. That’s a great strategy for a first-time REI and is what I was hoping to do. But, alas, I couldn’t take advantage. Unfortunately, my market has primarily 100+ year-old housing stock and I quickly learned that very few would qualify for an FHA loan. So, I bought a duplex with conventional financing and am saving up my pennies again for a 4-plex.

    I’ve read a number of the creative financing types of posts and have come to much the same conclustion as Scott. No…or even low money down…REI is not easy or very doable when you are fairly inexperienced. But then I never thought it would be. At least now I know, thanks to BP, that the “gurus” are talking about wholesaling with their “no money down” claims. And I’ve also learned that wholesaling would probably not be something I would like or where my expertise lies.

    With all that said, I am buying the new BP book about “no…low money down” REI in the hopes to find kernels of information that can advance me to my next step sooner. Even as a complete newbie…never having owned any real estate…I definitely had to think outside the box and get a bit creative to make my first deal happen. You just never know when a new idea will be the perfect answer or prod another idea that is the perfect answer.

    • Scott Trench

      Jennifer, thank you for your response! I think that you are approaching the practice of investing very intelligently. I think one of the best points you make is that you don’t think you would like wholesaling and have to start from a position lacking expertise. I think that point is critical and a reason why I would definitely prefer to stick with my job!

  31. Alan Mackenthun

    Agreed. If you’re not bringing cash to the table, then you’re not investing – you’re working. If you’re using all OPM, then they’re gambling and you’re not likely to last long. The exception proves the rule, but that’s my take.

  32. Walker Hinshaw

    Scott, I think you make a great point about investing vs. working. While I agree with Brandon that you can get into the real estate field with little or no money down, I do not believe you can “invest” in real estate with little or no money down. If you want to work in real estate, go for it, just don’t fool yourself into thinking you are going to be able to invest someone else’s money and sit back and coast your way to becoming a millionaire.

  33. Brian Gibbons

    I think it takes great talent to negotiate no money down deals it’s not an easy thing

    Not only do you need to understand notes and subordination notes and commercial finance but you need to be able to negotiate with a seller that likes and trusts you and you need to do something fair for both

    Ben understands what’s possible with both creative financing and traditional commercial finance so we can kind of teach the salary with all the options are and then show them why it’s good for him and see if you can negotiate a good deal for himself as well is a good deal for the seller

    • Scott Trench

      Brian – I agree. I think I’ll qualify that a bit and say that it takes both talent and Knowledge.

      There is a very significant upfront cost to investing with no money down in my opinion – there’s the education and reading/networking, and there’s the school of hard knocks, as Ben likes to call it. The question I think is relevant is this:

      Is it less expensive for most folks to invest with traditional financing via their personal savings earned through their current profession, or is it cheaper (on a per hour, or time basis) to put in the time and energy into learning about Creative Finance?

      And I totally agree with your point about making any deals a win/win. Anybody can get lucky and/or steal someone’s shirt on a property deal. But I believe that’s bad business – good business involves treating folks fairly and creating a positive outcome for all parties involved – it’s called creating value.

  34. John Hamilton

    I got the gist of this article. Some people don’t like to hear the hard truth. Too many gurus are saying you can invest with no money down, no credit, and no risk. After you pay another $1,000, they then tell you some of the tricks they used and samples of their paychecks. Then, for another $40,000, you get almost the whole enchilada. All the information. Now what? Exactly.
    For the experienced investor, this article is apparently NOT FOR YOU!

    I think that there are ways to be creative and find those “no money down” deals. Seller-Financing comes to mind. However, everyone I’ve met in this business always has the same question: how much money do you have to invest? When you say I have no cash, the person on the other end of the phone quickly loses interest and patience. Even the seller wants you to prove yourself (how serious are you and can you perform). How does that happen? Some sellers may take risks and do nothing down with awesome rates and low payments for 30 years. Is that reality? Can people really make deals with FSBO for $10 EMD and assign? I hear it happens. Whether it’s true or not, I don’t know. Never followed up to find out. Is it impossible? I think that has been answered in many of the comments.

    This article has many points:
    1) Keep your day job – Unless you are a real estate rockstar, use your JOB to build up capital
    2) No money down – This is subjective and causes those who have done no money deals (tho not so simply stated) to speak up in outrage and call BS. I feel that anyone can find a no money deal, but holding your breath until you find one will cause you to pass out…over and over again. Especially as a newbie.
    3) Investing or working? – If you called Donald Trump a working investor, you’d be wrong. However, he grew his business by investing in systems, people, property, etc to get there and had to put alot of “work” in his “investments”. To me, unless I was a real estate agent or broker, appraiser, inspector, etc, I prefer to call myself a real estate investor and sleep just fine.

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