I can't leave Square 1 ! Minimal Capital & Low Credit

[Aaron Phillips]

Hey BP,

It's me again and there is so many questions I have that I know I could probably find here on the BP forums, but I find myself in the same rut. Money & Credit.

I myself come from a very poverty stricken area in Cincinnati, OH. Recently relocated for my business to Parkersburg, WV. I currently run a cleaning service but I am not rich by any means. It's just a locally owned cleaning company.

A little about myself is I am 21 years old, and I have had a passion for Real Estate Investing for as long as I can remember. At first it just seemed like a gateway for me to earn the financial success that I've always dreamt about so that me nor my family would ever have to struggle again. However, within the past year I've become obsessed with it. I've read books, I get on BP religiously, I have been studying different ways to get into REI with little to no money because essentially that's my biggest downfall is no capital. Due to identity theft issues, which I won't get too far into, my credit score is sitting pretty low right now which is terrible. Banks will literally laugh me out of their offices.

Since coming to BP, I stumbled across Wholesaling. I know Wholesaling is for individuals who lack the funding to be a cash buyer themselves, or lack the credit to get a HLOC. I was going to try my hand in it, but I had more people telling me that it was flirting with illegal issues than people telling me to go for it. Not to mention I just didn't feel comfortable doing it.

As of right now I make around $2,000 a month after I cover all my overhead for the business, and that $2,000 has towards my monthly bills (Rent, Gas, Electric, Water, Food, etc..) So I am on a pretty tight budget. It's when I do these number crunching that I start to get discouraged because I feel so far off from being able to do what I want to do with REI which is building my own rental portfolio. My goal is to one day have 100+ rental properties of my own, and right now I feel like i'm just walking in a circle.

Do you have any suggestions for me? I have low credit, though I am working on it daily -- and I have minimal money. Any advice helps, and I appreciate you taking the time to read my post.

I look forward to hearing from you all! 

[Steve McGovern]

@Aaron Phillips,  I have a couple of thoughts that may or may not help you, but I hope they do.   

When we talk about businesses working together to benefit each other, we talk about compatible businesses.    The Real Estate and the House/Property Cleaning  co. are compatible businesses.   Put this into your head- NOW:  You are not  just a "Cleaning service. " You are a PROPERTY CLEANING SERVICE.  You make properties more beautiful, or sanitary or more livable or more workable. You know about green cleaning solutions. You know about bathrooms and kitchens.  You know what solutions will dissolve what finishes.   You know when to use bleach, when to use ammonia, and when to just pitch the damn thing.  

Congratulations-- now you're a Tradesman, no different from a plumber or an electrician.   Absolutely do NOT drop this company-- it gives you a legit way in.  

Now,  I would do two things simultaneously:  1) attend all the REIA's you can and pitch your service.  No one needs Cleaning services more than people who are moving.  

Amend that-- if ANYONE needs cleaning services more than people who are moving, then it's the other parties to the transaction and the service providers-- Lender REOs, Selling Brokers, Probate Attorneys, and Heirs of Family members who would like nothing more than to sell Aunt June's house without having to rummage through her unmentionables, and YES, RE Investors who have just (ahem) "Stolen" the neighborhood Victorian.  You know the one-- the run down one with the carraige house that the hoarders and their posterity have occupied for over a decade.  Yeah that one.  Buyers need cleaners too.  That's for sure.  

Now, the important piece:  2)  GET YOUR LICENSE.   This will get you a real start in "real-Real Estate" for short money.  It'll allow you access to new  Owners, new properties, and yes, new clients for your existing company.  Others here have simply said "work more."  They're right, but that's an empty comment.  This method gives you an actual path.  Whether you work 20 hours or 50 behind the RE desk, you'll be getting that "in" and whetting your appetite.  Furthermore, you can build 2 compatible businesses simultaneously-- tell all your Cleaning clients all about your real estate passion; tell all your RE Clients all about your willingness to get your hands dirty on their behalf.    These businesses deserve to be built together.  

One last thing--  Credit aside, I offer you this final comment:  

$3K is 3% on a $100k home. I bet you can buy SOON if you want to. Others may say "no, wait..." and that may be prudent. But if you can find that risk-mitigating duplex where 1/2 is turning rent and the other is your contribution... then I bet an FHA Loan is more or less in line with your ability. Talk to a trusted loan officer before you write yourself off. Don't jump at the first thing they say. Deliberate well, but I bet you're closer than you think.

Good Luck.  You're gonna make it.