Low to No Money - Where to start?

Question

Hey folks! Brand new to BP and I've done a fair share of reading, but I'd love to see what others think about low to no money investing. Where should I start? I'd like an answer in perhaps four scenarios which would be: "$0", $5k, $25k, $50k. If you don't feel like answering in multiple scenarios the $0 - $5k scenario is the one I'd be more interested in hearing. I have some ideas in mind, but I want to confirm what I've thought.

Thanks,

Tom

Thanks,

Tom

Ralph R. · Answer

@Thomas Horner

@Scott Sewell   Yes what im saying is in alignment with Robert Kiyoski's books but it's also in line with the bumps I've run into especially recently. I just purchased The second of two properties since the first of the year.  Thats taken a huge toll on my cash on hand. The last one closed july1st and is already being painted. It needs carpet and some minor repairs. Then one of my long time tenants puts his 30 day in. He's buying a house. That's another turn over and not one but two vacancys out of 8 units. Not one but two turn arounds. Where would I be if I had sunk every last penny into this last property??  Yes there was a time when I had no money and lived pay check to pay check just like the average American.  It took a couple years to get cash positive with my W2 income but I did it.  I did it because I almost lost my first property when the market crashed. I had big payments and couldn't make them with the rent The market would bear. ($950 dollar payment, $850 a month rent.  Add cap ex and maintance and 10%  for a PM.   If you want to know the cost of learning real estate Plug that into the BP rental calculator) then multiply by 24 months because I rented this house a couple years like this. I couldn't sell because I owed more than the damn thing was worth. when the tenants would move out, I  remember cashing my pay check making the payment and having less than $50 dollars left  This went on for several months sometimes because the rental is in a real small town and hard to rent. No car and ramen noodles for dinner literally. you know how far $50 bucks goes in alaska Scott. I was living in Indian Alaska (Indian Valley meats). They supplied room and partial board. It's the only reason I didn't go bankrupt. Fast foreword to today. I still fight that rental but a refi and some down payment and the rental is cash flow positive. I would sell it but it's questionable if I could sell and make enough to pay closing costs. Add in the CG tax (10 years of depreciation) and I STILL loose.  I was an accidental landlord because I moved to Alaska. The house was my home in Colorado. The house was purchased too high, with no down payment. It's in the wrong location either to appreciate or rent easily (very small town in Colo). I over paid for the house even though the seller walked away still owing $20,000. (He had taken out a second. It was a short sale) Then I refi to get the payment down and had to put in a down payment because it was an investment property, not my primary. If I can save somebody learning these lessons the hard way I'm glad to do it.   RR

Scott Sewell · Answer

Amen brother @Ralph R.,

Ralph's advise is solid @Thomas Horner, it takes time and effort to succeed in any venture. The biggest thing I can suggest with $0 is to educate yourself. Listen to the podcasts here, read any and all materials on the subject that interest you, and finally, (you're doing it now) engage in this community, it will shave YEARS (decades?) off your learning curve.

I'd also (chiming in on Ralph's advise) take to heart Robert Kiosaki's advise about assets vs. liabilities, it's a game changer.

Good luck, and great investments,

Scott

Judah Alexander · Answer

@Thomas Horner

wholesaling, wholesaling, wholesaling....minimizes risk while you are able to make money and learn the business at the same time.

Just my 2 cents, good luck.

Tyson Cox · Answer

Whether it is your money or someone else's, I would consider having a downpayment of 20-25%. If you don't have it, get a partner. Leverage is wonderful. It is what a good real estate investment business is built on, but you can take it too far. Over-leveraging can be just as harmful as under-leveraging. It must be balanced to withstand market changes. Changes like the downturn we may see soon here in Alaska. My goal is to be able to run each of our buildings with only 50% of the current income. That means paying all necessary utilities, maintenance, and PITI. This allows for units to be empty or rents to go down without needed to get money out of my pocket. I have only found that to be possible with a 20-25% downpayment.

Rick H. · Answer

You best ROI will come from the investment in your education.

When I started (1978) I spent about $200 on a real estate licensing course and $300 on a one-day class about buying foreclosure property.

In 1995 I spent $5,000 on a (3) Day Jay Abraham event that changed my life as I truly learned how to become a serious marketer. My income quadrupled within two months after that investment and implementing what I learned.

My annual education budget is about $35K per year. Not bragging, just stating that I continue to receive a high return on my investment.

Somehiw, you'll have to get tru the big lie that you can learn everything you need to know in a discussion forum or that you must spend big money with frauds like Kiyosaki. The answer to the riddle is in the middle.

If your budget is $100, then spend it on education material that you can refer to later. Books and tapes fit that category.

Work on your attitude and take some type iof substantive action -- every day!

Anastasia Jordan · Answer

I'm working in the $5k and less scenario buy purchasing tax delinquent properties thst have been abandoned by previous investors who have already done 70% or more of the upgrades and will DIY on the remainder of the rehab.

Sam LLoyd · Answer

Ah... the voice of experience.  My first investment property was a nothing down deal out of state that cost me about 60k in the end.  Looking back, it's amazing how my wife and I did it.  We had just rehabbed our first duplex.... owner occupied, so not really anything down on that one either.  We had loads of credit card debt left over from the rehab, and about $1000 negative cash-flow from our other investment, but we ate that ramen and worked overtime when we could, and pushed through that time.  We couldn't have done it without both incomes.

So... please bounce any investment ideas off this forum.  There are many opportunities that can turn out to be financial traps.  However... if you look at both RR and my experience, you see that a bad investment, lost sleep, losing lots of money.... they can be overcome and be the building blocks of a successful real estate portfolio.... it just would have been nice to avoid that expense.

Thomas Horner · Answer

Thanks @Judah Alexander I'll look into it a little more!

Low to No Money - Where to start?

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