i need to renovate with no money. any suggestions?

Question

I live in a home that i would like to make my first rental property, which needs a ton of work. my credit score wont allow me to finance a pack of gum, so im unable to get a heloc. and my job doesnt pay me enough to have a savings. i have been doing a few diy projects here and there but at this rate i will have my property ready for rent in 2040. any suggestions on what i can do to speed up my renovation project to get this house rented out sooner? thanks

Jody Sperling · Answer

I'm going to go the unpopular route: you appear to be a pro member. That's $300-some dollars you could have spent renovating. I mention this because anytime I see someone say their job doesn't allow them to save, I immediately want to dig into their budget and find the fat. It's always there. I have fat in my budget.

When you set a goal to do something, you have to bring every resource, no matter how big or small to bear. Do you eat out? Replace meals with savvy grocery shopping. Do you have memberships: Netflix, BP, DIsney+. Cancel them.

The next piece is finding a part-time income stream to accelerate your savings. If you have a new enough car, you can deliver for Uber Eats or Grubhub or do rideshare. If you have skill writing you could sign up for The Content Authority or Textbroker and write SEO articles for money. There are so many side hustles that can bring in money.

All of these choices are difficult, but they all represent a goal that must be driven by a future vision.

Before I married, I had twenty thousand dollars in school debt, twelve thousand in credit card debt and less than ten thousand dollars of income annually. My credit score was cratered with late payments, high leverage, and open accounts. This was in 2010, so not long ago. We went through some marriage counseling before the wedding day and one of the things our counselor told us was that marriages broke up more often because of money arguments than any other cause.

That planted the seed, and since the time we had our first child, a son, in 2012, I have strived not only to repay my debts, but to build the kind of wealth people scoff at. As of June this year, when we purchased our first rental property, my credit score was 820, we had thirty-thousand dollars in savings and my annual income was ten times higher than what it was in 2010. My student debt is gone (I regret paying it off since I could have used some of that money to purchase more real estate, but we live and learn) and I have zero credit card debt. We traded a great deal of in-the-moment comforts to achieve these things, but it hasn't been all dull.

Along the way, my wife and I have taken multiple one-week vacations: NYC; drove the 101 from Portland, OR to San Diego, CA; drove from Portland, ME back home to Omaha, NE; and hit Chicago for food and Cubs games several times.

If you want to escape your financial burden and achieve financial freedom, you can, but it requires difficult choices and hard commitments. Best of luck to you!

Joe Aiola · Answer

@Jessie Victorio Congrats on making the first post! @Joe S. and @Jody Sperling offer great advice. You should view your finances as being completely in your control. We all don't start in the same spot, but we all have the ability to get to the same result - it just depends on how bad you want it.

I would work building up your credit and your savings before thinking about rentals. Vacancies and repairs can be detrimental if you don't have enough in reserves. Cut expenses and get a side job if you need to - this should help get the ball rolling.

Best of luck!

Nathan Gesner · Answer

It's foolish to think you can build wealth without some sacrifice. I recommend you build a strong foundational understanding of real estate investing.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by @Brandon Turneror The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control your finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by @Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up.

5. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Jeffrey Gagnon · Answer

Personally I used Dave Ramsay's plan to get out of the debt I had. Was about 30000 and I managed to do it in about a year-year and a half on 60000 a year. Once you get debt free and have an emergency fund is when i would recommend investing. Of course it can be done with other people money, but that comes at a very high risk. https://www.daveramsey.com/dav... I believe steps 1-3 are universal, beyond that individuals can make personal choices with their money :) good luck!

Vincent Mazzaferro · Answer

@Jody Sperling has great advice and some others here do as well. My advice? Grab a hammer and start watching YouTube! I'll be rebuilding two shower valves tomorrow and replacing a toilet.

Kathy Johnson · Answer

In addition to the above, if you join your local Buy Nothing group you can ask for some of the things you might need for your remodeling or for things that will help you keep your budget down so you have more to spend on your renovation. In my local group people have given away things like paint, sinks, bathtubs, windows, direct vent propane heater and more. You don't have to wait for someone to post something you need. In the Buy Nothing groups you can also post 'Asks' where you tell people what you are looking for. I just picked up a generator, weedwhacker and tiller this week. Buy Nothing also allows asking for or offering gifts of time, so you can ask for someone to help you figure out how to fix something. There wasn't a local group where I live, so I started one thinking it would probably be while before it built into something useful, but it took off. My group started just before the pandemic so it was a timely help for our community too.

Account Closed · Answer

@Jessie Victorio

With a brutal credit situation I’d be curious which tent city you’ll be moving to when you become a landlord?

Alan Strong · Answer

@Jessie Victorio

If the property is habitable I would do a lease option with the lessor taking on repairs.

Depends state law if you can structure this way.

Otherwise find a money partner to provide cash to fix up with a shared return depending on if you can positive cash flow a large amount.

Good luck

Greg M. · Answer

Flat out, you're not in a position to be a landlord. You live paycheck-to-paycheck, have bad credit, unable to obtain credit, and have no savings. You are one bump in the road from being homeless. What are you going to do when the unit is vacant, or the tenant doesn't pay and it takes you 6 months or a year to get them out by eviction, or the roof or HVAC needs replacement.

Before you can become a landlord you need to do a few things:

• Fix your credit. There are ways to remove negative info from your report. Do research on it. Pay your bills on time. A recent history of this goes a long way.
• Start saving money. The idea that you don't make enough to save is BS. Sit down and write out all of your expenses. Review every one and see if you can reduce them. Cancel services, change to different vendors, downgrade plans, etc. Change your buying habits. Saving money isn't fun, it's a sacrifice.
• Earn more money. You are doing DIY projects? I'm going to assume you're handy. Offer your services to others.
• You own your current place. Do you have an extra bedroom you can rent out? No one wants a stranger living in their house, but this could bring in a few hundred dollars extra every month.

When you get these things in order, then you can start looking at being a landlord.

Jonathan Klemm · Answer

@Jessie Victorio - I see two viable options......pick up the tools to do the work yourself or find a partner that has money to fund the rehab.

Lastly, I guess you could sell off the project and cut your loses?

i need to renovate with no money. any suggestions?

i need to renovate with no money. any suggestions?

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