A Realistic Look at Starting Out in Real Estate Investing With No Money


Let’s face it: We all need somewhere to live. Unfortunately, though, housing is usually everyone’s biggest expense.

So, as soon as you can save up a little money, maybe you should try to buy your first place owner-occupied, even if you don’t plan to stay there forever. It could always be a future rental if one plans accordingly.

For me, I remember scrimping and saving as my small family lived in the most affordable apartment I could find. By living off my day job and saving the money from my second job, I was able to save up my money for my first duplex that I purchased owner-occupied. This can be done quite quickly, especially if you utilize the seller assist.

The 20 Best Books for Aspiring Real Estate Investors!

Here at BiggerPockets, we believe that self-education is one of the most critical parts of long-term success, in business and in life, of course. This list, compiled by the real estate experts at BiggerPockets, contains 20 of the best books to help you jumpstart your real estate career.

Click Here For Your Free eBook!

Take What the Bank Allows

Starting out trying to build up my rental portfolio, I took what the bank allowed. Most conventional residential financing will eventually cap out for most buy and hold investors, whether that’s at four, ten, or sometimes even more units in a relaxed lending environment. Eventually that party ends. So, my strategy was to take what I could get, and it worked very well.


Work Your Way Up

Once you get started, you can build your portfolio by keeping the momentum going. Whether you have the ability to save up some money for a down payment or closing costs for the next place, or if you have little or no cash, you can still make it happen. It’s all in the deal.

Related: No Money? No Credit? No Real Estate Experience? Read THIS Before You Do Anything Else.

Find a Money Partner

You really don’t need any money, you just need a good deal. If you have a true deal and the numbers work, it becomes pretty easy to find a money partner.

For the numbers to work, in most cases, you have to be able to refinance the ARV (After Repaired Value) for the amount of acquisition (purchase price plus closing costs and cost of capital) plus the amount of fix-up and costs to refinance.

Also, you would want the market rent to be higher than PITI (Principal, Interest, Taxes, and Insurance) of the new mortgage payment after the refinance, hopefully by a few hundred dollars. You need that positive cash flow to be able to cover future maintenance and vacancies.

Once you know that your numbers line up and you have a nice team in place to acquire, renovate, and manage after the refinance, run it by a potential money partner.

Although one or several could be found amongst family and friends, the best way to meet and build a relationship with a potential money partner may be through networking. These days, there are many opportunities, such as local real estate clubs, investing groups, or even online resources like here on BiggerPockets. The biggest thing is to build trust by getting to know each other.

Related: 4 Feasible Ways to Get Started in Wholesaling With Little to No Money

Recently, I had three different investors approach me to do private money deals, and you know what? I’m doing all three. They’re all good properties in good areas. The comps look good, the repairs make sense, and these folks actually sound like they know what they’re doing.


How Do You Know You Have a Good Deal?

If I was new, I would just run my deal past a hard money lender. In most cases, you’ll quickly find out whether you really had a true deal or not. You can even run it by a fellow real estate investor first who has received funding from private money partners in the past, as they may have pointers for how to present the deal in the best light.

The last guy that I’m funding for a deal had really done his homework. He was very clearly describing his business plan, the deal, why it makes sense for us to be partners, etc. He pretty much had thought of every detail, and that’s what made me feel very comfortable and confident in funding the deal.

So, who says you need money to get started in real estate investing? What are you doing to make your private money partner feel good about partnering with you?

Leave your comments below!

About Author

Dave Van Horn

Dave Van Horn is President at PPR The Note Co. - an operating entity that manages several funds that buy/sell/hold residential mortgages, both performing and delinquent. Dave has been in the Real Estate business for 25 years, starting out as a Realtor and contractor and moving onto everything from fix and flips to Raising Private Money.


  1. Douglas Skipworth

    Another great one, Dave.

    As I’ve always said, “Whenever there’s a willing lender, I’m a willing buyer!”

    Of course, I’m being a little tongue in cheek, but, like you, I really believe that a good financing partner (be it a private money person, a hard money lender, a local bank, or even a seller) can be one of the greatest tools an investor has. Thanks for reminding us that finding deals is the key!

  2. Rick Grubbs

    While this is true, it should also be noted that before someone is going to lend you the money, you have to be bringing something to the table as well. If you have no experience and no money of your own to bring, why am I going to lend you money? The exception may be with friends and family, but even then I would not loan money without the recipient having some skin in the game themselves.

    • Dave Van Horn

      Hi Rick,
      I agree that it’s easier when they have some skin in the game or even an escrow account set-up. But, sometimes, they don’t have a ton of capital even when they found a great deal. So, another way to make sure the work gets done right may be to utilize draw schedules more efficiently. Personally, I’ve only lent private money to people I had a close relationship with.

  3. Like Dave, I got started with traditional bank financing until my wife and I reached our property cap ( about 14 back in the good old days of 2007). Then the traditional banks completely stopped lending to investors.

    I found a small community bank that will consistently lend to me if the numbers work. They loan 75% LTV and their fees and rates are higher than a Chase or Bank of America. They want to see tax returns and cash flow. But they will lend. In my area ( Chicago suburbs) , there are still good cash flow rentals to be had if you have the money to get them.

    • Dave Van Horn

      Hi Gary,

      Thanks for commenting. Glad to hear you found a bank that would lend you money for what you’re looking for but the terms on loans like these are just as important as the availability of the money. Not sure all the details, but there are a couple things to look out for.

      For example, if it’s a commercial loan or a commercial blanket, this could be a loan that recasts every 5 to 7 years, so the bank could re-evaluate you/your asset and they could theoretically call the loan or expect you to bring money to the table if the property were to drop in value.

      So don’t forget if the numbers don’t work for them, or you’re looking for more favorable terms (i.e. where you could put down less capital at purchase), you can always find a money partner!


  4. Mark Pace

    I found a family member that had their money in a bank CD. It has been a great deal for both of us. We were able to work out a payment plan that was good for both of us. This relationship started by me sharing with other people what I do in my business. Before long this family member was asking me if I would like to borrow from him instead of the bank. We have now done about 10 deals together. We all hate all the hoops you have to jump through to get bank loans. Dealing with private money is much easier.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here