Starting out in Dallas with $500 ....any advice?

Question

Hello,

I am just jumping into REI. I have been doing research for several months, and now i am trying to figure out how to get my foot in the door.

Current problem, is I only have about $500 to get going with. Obviously, not a lot to work with. Anybody have any thoughts on how I could even get started with so little money? Do I just need to sit back and try and save for another year or so and try again when I have more?

I am based in East Dallas, and looking into properties in my area. Probably buy and hold, SFH but potentially small multi-family.

Thanks team!

Sawyer

Joseph Gozlan · Answer

you should probably spend some of it and get this book: http://get.biggerpockets.com/nomoneydown

I'd say, take the $500 and spend it on your education first.

James Palin · Answer

Hi @Sawyer

@Sawyer Nyquist I agree.  Getting started with little money is difficult.  Especially when it comes to fix and flip or buying a rental. Most lenders want you to put some money down.  Another way is to do a flix and flip is to find a JV partner where they bring the money and you bring the work, etc.  You split the profits.

One way to get into the business with little money down is wholesaling.  Yes, you still need some money for marketing, but there a lot of ways to find houses with little to no money.  Here are a few ideas.

1) Driving for dollars.  You are only spending money on gas.  Or you can break out the road bike like I do.  (Cycling for dollars) or walk or jog the neighborhoods.  No cost at all plus you are getting exercise.

2) Craigslist.  Although attracting traffic to your ads can sometimes be a challenge, it doesn't cost anything to post an ad.  You can also look for distressed properties and tired landlords on here by looking in the for rent/sale sections.

3) Bird dogs.  Find people who travel neighborhoods as part of the daily job. (postal workers, delivery drivers, etc)  Ask them to keep a look out for houses that look distressed or vacant.  Offer them a bird dog fee if they find a deal that closes.

You could also offer to be a bird dog for someone.  You can earn money while learning from a seasoned veteran.

4) Door knocking and flyer distribution.  Printing up some flyers and leaving them on doors of potential properties is usually a very cheap option.

Once you get a couple wholesale deals complete, use those profits to put into your fix and flip, rentals etc.  Lenders will want to see that you have some skin in the game.

Good luck and let me know if you need anything.

Regards,

Michael Hayworth · Answer

Getting rich is rarely a quick process. Build a lifetime of wealth-style habits..

Get a good job.

Live below your means.

Save more money.

Gain financial experience.

Make yourself a better businessperson to get promotions at your job.

Buy a house (or a duplex or a 4plex) to live in as your own residence.

Live there for a year or two. Save more money. Buy another property and make the first one a rental.

Lather, rinse, repeat. Within ten years, you can have a formidable portfolio and great savings.

DON'T go become a bullshit wholesaler with no money who gives sellers false hopes and cancels on them if he can't find a buyer. If you have no money, no way of running realistic comps, and no real-world experience estimating repair costs, you're not credible and credible buyers will give you no respect. Being a good wholesaler is one of the toughest roles in real estate investing.

Read and absorb The Millionaire Next Door. In the guru seminars and motivational business - who are just talented salespeople separating hopeful people from their money - getting rich quick with no money seems easy. In the real world, gaining real wealth looks a whole lot more like years of hard work, self-discipline and reasonably good decision.

Good luck.

Joseph Newton · Answer

Here are some idea's that have not been mentioned yet. Outside the box, but worth considering. $500, that is at least enough to pay for an inspection of a property....

If you are willing to live in the property for a bit you could consider the SETHFC program. SOUTHEAST TEXAS HOUSING FINANCE CORPORATION. It is a Grant ( you don't have to pay it back) for up to 6% of the down payment or closing cost. It can be used with an FHA loan. It also has higher income requirements than most first time home owner programs. You can make up to $80,960 as a single person.  Maybe you can find a duplex or something and live in one side while you collect rent and learn what it is to be an awesome landlord. www.sethfc.com

If you have a really (really really) low income look into a first time buyer program. A lot of cities around DFW have them. They give you free money for buying a home in those cities. You will have to live there a set number of years, but could be a good start with free money. Also, if you are a teacher, fire fighter, police office, there are programs with HUD and others that will help you purchase a property. Some at a 50% discount. Again, you would need to live there. But this could be a start. Buy, live/save, and in a few years sell, make money, and invest in something better.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/goodn/gnndabot

www.tsahc.org/homebuyers-renters/eligibility-quiz

Depending on your situation, if you are able to move outside of the East Dallas area a USDA loan could be done with no money down. If you qualify for a VA loan these can be done with no money down as well.

I would highly encourage you to find investors you can help with "grunt" work. Building relationships, while you learn, and maybe even a little cash on the side.

Good luck! & please post any updates. Would love to hear how things are working out for you. What has worked, what hasn't. @Sawyer Nyquist

Dennis Weber · Answer

since you are in Texas, I would go to the county courthouse and check the struck off lists of auctioned deeds and see if they have any lots for $500. If by chance they do, go to the neighbors house and see what that lot is worth to them.  Do not buy raw land. Good luck!

Mark Elliott · Answer

hi sawyer. you are in a tough spot with the little money down. deals are out there, but with that little down, the deals will be few. let me give you a couple of ideas. first, lets state that the saying " it takes money to make money" is very true. you need money. if you don't have much cash yourself, then you need to use OPM, other peoples money. this usually requires a bank and a loan. take that $500 and put it into an account. after a month, go to that bank and ask for a $500 loan, and use the account as collateral. take the borrowed $500 and start an account with another bank. repeat the process as often as you can. at some point, use the last $500 to pay off the first $500 loan, and repeat that process. the reason being is because you are establishing good credit with several banks. pretty soon, you will be able to borrow money from these banks in larger amounts and with no collateral, thus resulting in using other peoples money.

2nd idea: a few years ago, the feds put a limit on the number of foreclosed houses banks could put back out onto the market. they did this because the flood of foreclosed houses was killing the housing market. so the bank was left with a lot of houses they literally could not put back on the market. so, they had to decide if the cost of being forced to hold onto some of the houses for an indefinite period of time was worth it or not. the ones that were not worth it, they just "dropped" off their books. they do this by just filing a " release of lien" or a " release of mortgage" with the county register of deeds. this does 2 things. one, the bank no longer has any claim to the house, and therefore, no liability either. and it also puts the ownership of that house back into the hands of the previous owner. most of these owners do not know this happened because the letter the bank sends out to them goes to the last known address the bank has for them, which is often the house that was foreclosed on, and the owner no longer lives there. you have to find the owner and by the house from them. most often, they do not want it anymore. you may be able to get these places for your $500. beware, quite often these houses have years of back taxes owed on them so do your research. ask the tax authority if you can make a payment agreement with them on the house BEFORE you buy it from the owner. use the back taxes issue as a ploy to get the owner to sell the house to you cheap. this takes time to find a house like this. i have been doing real estate investing for many years now and i have only bought 2 houses this way, but its worth the shot. i bought one like this for $2000 on a tuesday and sold it on thursday for $10,000. good luck to you.

Alberto Camacho · Answer

If your serious about getting started drop me an email. I could use some help in Dallas county.

Vincent Crane · Answer

You need to save more money. Even though deals can be done for less than $500, it's when you have a lot of experience and really know what you're doing. You need to have a reserve for the risk attached to deals. Just save up more.

Riley F. · Answer

I'd hate to be the one to "rain on the parade" so to speak, but with $500, you might as well have $0, so I'd say forget about leveraging your money and think about how you can leverage your time to increase your bank roll - that is your real asset. You can go knock on doors, drive neighborhoods for vacant looking homes and send letters, offer yourself to do footwork for an out of state investor, post on Craigslist, drop off hand made pieces or door hanger so to houses. Even if you earn 5x on your money, you still only have $2500. You can earn 5x that on a successful wholesale.

Don't bother trying to raise money with no experience. It's a waste of your time.

Starting out in Dallas with $500 ....any advice?

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