How to start in Real Estate with no money

Question

This is a very broad question but I read the forums and went to my local library to check out a few brandon turner books but I would like other peoples input on how they started or an idea that could help me start. I have no money and would like to get into real estate. If this isnt the way to go about finding the answer any help would kindly be appreciated.

Richard Rolle · Answer

Aaron,

You say you have no money, which I presume means no cash, but how is your credit?

There are lots of ways to get into the game without your own cash and I'd be glad to share some ideas with you.

Start with making some connections.  Most important, investors that have money looking for deals.  I'm sure you've heard of wholesaling?  I think thats a tough gig.  In this market, in this area, finding a wholesale deal that you can mark up and still have enough meat on the bone to pass to an investor is rare, but can be done.

I recommend a variation to this.  Start a relationship with a hard money lending company and start relationships with investors to partner with you.  You can find flips to buy with hard money.  Your investors cover the renovation costs and split the profits on the sale.  You can also do buy and holds for rentals if you have investors that can refinance after renovation.  (see BRRR)

I want to caution you on a couple things to make sure you have in line.  I believe this is "make or break" stuff on your deals.

1. Make sure your numbers are on point.  Its easy to find the sales range of houses in the area. For example, I can almost guarantee a 3/2 in Tacoma area is gonna sell for $245-$265K (YMMV based on sq ft, premium areas such as North Tacoma etc.) that's the easy part.  The magic happens with the timelines and budget.  Remember its gonna cost you ~9% closing costs, reno budget and holding costs. Subtract this from the sales price and you have your potential profit.  Make sure there is cushion, especially for your early deals.  Make sure you work with a Realtor that understands investing, not just opening doors.  Your agent can be your best asset in making sure you buy right and sell fast for most $, as well as connecting you to the right resources to complete your project.

2. Contractors.  Who is gonna do the work?  This is huge as it impacts timelines AND a bad contractor can greatly impact your costs and quality of final product.  If you are swinging the hammer yourself, do you have the skill set to do a professional job or will it look like DIY?

3. Permits and inspections.  If you are just updating, you are usually gtg, but if you are doing things that will add square footage, make sure you pull permits.  Helps greatly when you list as your claimed description will match county records and our friends at the VA and FHA will be much more likely to approve your buyers loan upon appraisal.

4. Exit strategy.  Have multiple ways to finish the deal.  Can you wholesale the property for a quick profit?  Can you flip it?  Can you buy and hold it?  If you depend on only one of these, you really can find yourself in a bind.

After a couple of solid deals, you should have a nice war chest to expand your options.

Hope this helps!

Jay Hinrichs · Answer

apprentice with a realtor or management company and earn some money..  real estate is not a no money business.. once you have some money occasionally a deal may fall into your lap that you can buy with little money down.. but if you have no money that means you have no money for reserves and really and honestly your not going to get any financing and the first time you have a hiccup your going to have a cash crisis..

gets some seed money together.

OR  find a money partner.. you need some liquidity in this business..  remember the no money needed just sell books and tapes its not reality 99% of the time.

Andy Whitcomb · Answer

Hi Aaron,

Generally, you need three things to buy a property.  You need money, you need a deal, and you need to know what you're doing.  If you don't have one, you better have the other two.

I recently purchased my first property, a 4-plex, and I basically used none of my own money to do it.  First thing I did is exactly what you are doing:  educate yourself.  This is the #1 most important thing you can do.  The BP podcast is awesome, read all the books you can get your hands on, and then after you're exhausted of reading and you feel like you know it, then move to the next step.  The next thing I did is I started surrounding myself with people who have done it and are currently doing it.  As Jim Rohn often said, "you are the combined average of your 5 closest friends".  So if you hang in circles where people are buying houses, flipping houses, and renting houses, then pretty soon you'll be doing it. Yes you'll get connected, yes you'll learn more, but MOST importantly, you will start to truly believe that you CAN do it.  That YOU can do it.  It takes knowing people who have done it, and watching them do it, for that thought to travel from your mind to your heart.

Then, after all that, the next thing I did was find a deal.  Now, deals are hard to find, but you will only find it if you know what you're looking for.  If you skimp on the first two steps, it won't happen.  You need to know your stuff.  Once you have a deal and you know what you're doing, then the rest is easy.  The money will come.  In my case, I found a good deal on a 4-plex, got it under contract, put the whole deal together, then got my brother to buy in to the deal.  He funded it with his heloc, we renovated it over the summer, put in tenants, and now we are refinancing to pull out the initial investment to repay the heloc.  I wish I could say it worked perfectly, but we had all sorts of problems.  Some came from me being new, others could not have been foreseen.  But ALL of them were learning experiences, and the deal is a success.

Long story short; Educate yourself and surround yourself with the right people, THEN look for a deal, and finally look for the money (in the form of partnerships).  Honestly, all of this takes time, so in the mean time you can improve your financial situation in any way you can.  Credit, income, savings, learn money management, etc.   Do anything and everything you can, and always keep your eye on the goal of R.E. Investing.  It will happen.

Caleb Friberg · Answer

Hey Aaron, you're on the right path.  I won't be specific on how to invest with no money but Invest more time and what money you have to educate yourself as much as you can. Podcasts are free and highly beneficial as well. Keep a notebook with you and write down things you learn so you can quickly refer back to them. You'll need some kind of money to invest or at least have as backup, even if that means cutting back expenses bare bones for a year or two so you can save the rest. The moment I set goals, broke them down into tasks and took action, was when I started seeing results. My father always told me "Chance favors the prepared mind". Stay positive and don't quit no matter the cost.

Aaron Sal · Answer

Wow I didnt expect this many responses, I appreciate every response and all the tips that have been given. Thanks for the help everyone. I'm going to keep learning and find what route is best for me.

Ryan Evans · Answer

I think you'll want to define what "getting into real estate" means for you. Buying for cash flow and knocking on doors for leads are both "in" real estate, but are very different things. A lot of people start by trying to do things like wholesale or bird dog, just to get involved somehow, but I'd argue most would be better off getting a decent paying job and saving. That is if you want to invest, though.

Thomas S. · Answer

Adjust your life style to live as frugally as possible. Move to less expensive housing and room with someone. Get rid of cable/satellite, stop eating out, take your lunch to work, no vacations, toss the cell phone, lose the friends with wasteful lifestyles etc.

Most people waste hundreds monthly on useless expenses and wasteful life style. Dedicate your life to saving and you will have the money you need before you know it.

Ruth Bayang · Answer

Hi @Aaron Sal and welcome to BP. You've received a lot of great responses. Andy gave you the names of some solid local meetups. I consider Tarl, Dima and Tatiana stellar individuals and good friends.Also check out REAPS (Real Estate Assoc of Puget Sound) - they have at least 5 meetings a month.You can attend the first one for free. Since you're in the Auburn area, check out the next one in Fife at the Poodle Dog Restaurant on Jan 8, 2018 6:30pm.@Ryan Evans is on point with defining "getting into real estate." There are many ways to invest in real estate. I suggest choosing one or two ways and getting really good at it before adding more strategies.

Andy Whitcomb · Answer

For meet up groups, I would check out Tarl Yarber's group called Fixated on Realestate.  They meet in Renton every couple months and it's packed with great people, many of whom are on BP.  You can find them on BP, facebook and on Meetup.com.

I've heard good things about Seattle Investors Club, although I haven't been (also, that one has a small membership fee, i believe).  Also on Meetup.com is a group called Real Estate Wholesale/Flip/Self-directed IRA Workshops and it's run by Dima and Tatiana of Sound Housing.  That's a great group this is very casual and intimate so you can easily build relationships with people.

Aaron Sal · Answer

This helps a ton and I will take you up on hearing some of your ideas if thats cool with you. Any help I can get would be awesome. I sent you a friend request hope we can continue to talk about R.E. Thanks for your post and your time it took to share this with me it means alot to me. Appreciate it thank you

How to start in Real Estate with no money

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