Real estate is “sexy” again, and lots of people are again dreaming of the good life by getting into real estate. Problem is, many of these folks have little money or credit and even less real estate experience. Don’t believe me? Go to any real estate club across the country or peruse the Forums on this website, and you will see and hear some form of the same question over and over again. How do I get started with no money and no experience? Well, I’m going to share the answer with you right now. The answer is: Find a good real estate deal.
If you find a good real estate deal, then doors will open up for you. People will likely be begging you to take their money and give them the deal, thus solving your money problem. What about the lack of experience? Well, experience is not necessarily needed to find a deal. Experience certainly helps, but you can learn what to look for and how to secure a deal just as easily as the next guy can.
Unfortunately, the answer I gave raises another, more complicated question, which is: “How do I find a good deal?” The answers to this question are, I think, what will put you on the road to real estate success and get you the money and experience you need.
So how do you find a good deal?
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.
5 Steps to Get Started in Real Estate With Little Money or Experience
Learn Your Market
Pick someplace you want to work in. It could be where you live. It could be the trendy part of town, or it could be near your place of work. Wherever it is, learn what properties in that area are selling for in tip top condition. Once you do that, say for single family homes, you have an idea of the average repaired value (ARV) in your market. You will need to know this information so you can spot a deal when it comes along or negotiate the purchase of a potential deal.
Network With Other Investors
Before you find a deal, you need to find people to sell it to. Find a way to network with other investors. Learn about the types of deals they are looking for. Learn about the areas they want to do business in. This step is important in two ways. First, you can tailor step one above to your investor customer’s needs. Second, you will need these other investors later on as we shall see.
Look Where Others Are Not
It is really difficult for the newbie investor to compete with more experienced investors on the open market. Homes listed on the MLS or in foreclosure notices simply have too many people looking at them. Competition for these properties can therefore be pretty fierce. You need to find the deals before others do and look where they are not. How?
- Drive for Dollars: One of the best methods I have used to find deals is what is called “driving for dollars.” This technique has been explained elsewhere, and if you learn what to look for (tall grass, deferred maintenance, and a general unkempt look), it can really work. After driving you need to:
- Send Marketing Letters: Just do something simple, like a handwritten letter on yellow legal paper. It does not have to be fancy or too wordy. Just say something along the lines of, “I noticed your property and I want to buy it.”
- Repeat the Steps Above: Do this over and over again. Do not get discouraged if people do not respond to your first attempt. Sometimes it takes three or four times. Your phone will eventually start ringing.
Learn How to Secure the Deal
Since you are new, with little money or credit, your goal should be to flip or wholesale the deal quickly to another investor who you met in step 2 for a fee. To be sure you collect your fee, you need to learn how to secure the deal, and that generally means getting the property under contract. Once you do that, you can assign your contract or have a double closing. Do not tell others about your deal without getting it under contract. There are lots of unscrupulous people out there. Also, don’t use a 30 page contract. A simple one or two-page form is just as, if not more, effective.
Collect Your Check and Repeat
Perhaps have a nice steak dinner to reward yourself for a job well done.
So there you have it, the answer to the question, “How do I get started with no money or experience?” Not the quick and easy answer that I bet some of you were hoping for, but nothing worth doing or having is ever really quick and easy.
Where are you in your quest to become a real estate investor?
Share your tips and experiences in the comments section below!