I was broke when I first learned about creative real estate. I studied creative real estate for a year before taking any real action. I was working second shift at my job and had to use my vacation time to attend REIA meetings. I really wanted this to work because being an employee for the rest of my life was not in my vision. I volunteered for my REIA for two years straight. After one year of learning, I did not quit my job; I changed jobs to a first shift job, which allowed me to run my business better. I was also approached by a local mentor who had consistently seen me attend the meetings. He offered his services to me for no money up front. I had to split my deals with him.
I agreed, and unlike many, I actually followed through. I did not let life problems stop me.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
My $39/Month Marketing Scheme
Alright, so the “secret” 39-dollar-a-month marketing strategy was to get pre-stamped postcards from the post office and to write a simple offer on them. I would write, “I want to buy your house at 123 main street. Please call 123-456-7891. Sincerely, Nasar.” That marketing piece worked like a charm back when I was doing this in 2011. A postcard stamp was 36 cents. A pre-stamped postcard was 39 cents. I would buy 100 of them from the post office website. I would send out between 60-80 postcards a month.
As far as getting the leads, I was driving for dollars. I would get up every Saturday morning and pick out a neighborhood to farm it. I would look for tall grass, beaten up houses, old roofs, boarded up homes, just basically ugly houses. I did this consistently for 8 months. I would look for leads on Saturday, then I would spend Sunday cross referencing them on our city’s assessment site.
I tell people to farm neighborhoods now, and they come back with 10 addresses. I used to stay out there for 2-3 hours and come back with at least 100 addresses. Remember, the more leads you get, the better chance of getting more deals. You might want to keep that in mind before coming back with 10 addresses. I also would focus on lower income neighborhoods because you will find a lot of tired landlords there. I can tell you stories about me farming neighborhoods in the seedy parts of town and prostitutes with no teeth running up to me because I was driving slowly, even stopping at some houses. I would simply give them my card that said I would pay 500 dollars for referral of a house.
Anyway, after doing the leg work on Saturday, on Sunday I would look at the city assessment site to see if the property was bank owned or privately owned. If it was bank owned, I would not mail. After going through my list to see who fit my criteria to actually mail, out of 100, it would be maybe 25. I would put them in the mail on Monday. Tuesday and Wednesday, I would get a bunch of calls coming in. With my experience now, I would have closed more deals sooner — because I have more tools in the toolbox. However, at the time I was building up my confidence and negotiation skills and getting better at evaluating deals.
Finally, a homeowner was willing to give me his house because he was tired, and the house needed a lot of work. I got the house for $13k, sold it for $15k and made $2k. After paying my mentor, I took home $1,300. I blew that $1,300 dollars in two failed marketing campaigns. It happens! I did not give up, though.
The Moral of the Story
In conclusion, as you just read, I was able to get away with a $39 marketing budget. However, being that I started out with so little, I had a lot of work to do. If you don’t have a lot of money, please be willing to put in a lot of work. With real estate, it’s not the folks who start with the most money who become successful investors; it’s the people who are willing to work the hardest.
What’s the story of your first deal? What advice would you give to the newbie looking to jump in?
Leave your comments below!