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Updated over 5 years ago, 04/01/2019
How To Get Started WITH No Money?
Hello all! I know this one is tough! I'm trying to get started with NO MONEY, which is almost impossible. I've read plenty of books that say it's possible. I've even found a few properties that will do owner financing with me, unfortunately I just can't afford the down payment. Another thing is, how do you refer a property to an investor for an appraisal fee? If I could do that a few times, I would then have enough money for a down payment. I know that I'm not the only one who's been in this position before. ANY advice is great advice. Thank you.
@Sheila Campbell
How large of a property are you trying to acquire?
Va financing for 1-4 family is standard and credit does not need to be stellar
I'm also in the same boat with getting started with no money. Unfortunately, I'm in a situation where I'm going to need raise my own capital to invest. The strategy I am using is - saving as much as I can from my job, also work as a real estate agent so Im saving up all the commission I make and now Im looking into wholesaling.
@Sheila Campbell
From reading the thread, it appears you either know everything or have tried all the suggestions given.
Why are you seeking advice on this topic?
Thank you for your service to our country!
Use more time saving. considering you will make most of your money on the investment right when you initially buy it. When I first started my rental property business I had no money. LOL, So I bought the "worse" house I could find with a lot of value potential. I knew going forward that I was going to need to offset the rehab cost with sweat equity. Its a lot easier getting financing for rehab after the property is bought.
Starting is a tough point and its okay to start off slow. "its a marathon not a sprint. "
@Sheila Campbell
Hi! Tough spot. I'm by no means an expert also not being in the military I paid only fleeting attention to that podcast episode BUT the guy stressed that the VA loan is not limited to buying ONE property but to a max amount. If I remember correctly it is like with civilian house hacking, you have to occupy the property a certain amount of time, then, if you did not use the total max VA loan amount you can rent out your current house and buy a 2-4 unit place with the nice low down payment amount the VA loan allows, live in one unit and rent out the others so that your renters pay off the mortgage = house hacking.
Check also here veteransunited.com for more info.
Good luck.
Here is my suggested course of action. Do these three things (in parallel, not one after the other):
- Educate yourself. Finding this web site is a great start. Next read the Bigger Pockets book list, beginning with The Ultimate Beginner's Guide and then Brandon Turner's The Book On Rental Property Investing. Then move on to the rest of the list: The Best Real Estate Books for Your Investing Business. Follow up with the Bigger Pockets podcast - listen to every episode you have time for, then listen to them again. Try a Bigger Pockets Webinar or two for good measure.
- Connect. Network. Find and attend every Real Estate Investor meetup within driving distance. If there's none in your area, start one. You will learn there, but you will also meet people - learn what they are doing in Real Estate (and how they got started), and you will start to discover what YOU really want to do. And, you will know people who can help you with the next step which is...
- Partner. Find someone who has money but no time. You have time (and hopefully energy) but no money. If you've got the hustle, you can bring value to the relationship. Maybe you can hunt for and find a great deal. Maybe you can analyze a few dozen deals, identify the diamond in the rough, and bring it to your partner. Maybe you can cold-call owners of distressed properties and find someone who is willing to sell at a great price. Maybe you can manage a property from rehab through rental; deal with tenants, termites, and toilets; run the business. Do this in exchange for a piece of the equity (don't expect a big piece, this is your warm-up act) AND to further your education, so in the next deal you can bring even more value (and get a bigger piece of the deal).
After you've done these three things, come back and update us on your progress. (Spoiler alert: you'll never actually be done with them. You'll be more knowledgeable, connected, and valuable than you are now, but the journey never ends.)
Let us know how it goes. We'll be cheering for you!
Could you airbnb a room in your house? Take on a roommate? Sell your house and buy a duplex and rent out the other side?
@Sheila Campbell try wholesaling or virtual wholesaling. Also work with the owners on other options for the owner financing. If you have their ear, then it is time to get creative.
You could also help seasoned investors find properties. Negotiate your fee up front. Hard money lenders are also an option.
Welcome to the game and good luck! I didn't have a lot of money getting started but you may be interested how I worked around this. I used a JV partnership with local investors in my area (2 others to be exact) to buy a triplex that is going to be cashflowing like crazy. This is similar to syndication in that I had other investors bring money to the table but the difference is that my partners are active. We created an LLC expressly for our partnership and property and laid out how each investor was going to receive their cut ( 60% equity, 25% cashflow, etc). My two partners brought the closing costs and down payment and I brought relatively little money to the table compared to my partners.
Hope that helps!
@Anthony Pinto Thanks
@Sheila Campbell...If you have debt I would recommend a debt snowball payoff. Then work to save some money while doing this. I used Dave Ramsey to get out of debt in 32 months, sold my VA loan house after 5 years and now I have about 30K to invest in Real Estate. Also as a result of paying off debt I can save over $1500 a month easy. Consider renting out your house and getting a FHA loan for a duplex that requires 3.5% down. You can rent one side out and live rent free in the other one. Then after a year or so you can rent both out and repeat with another property. Also try to find a private lender for no or low money down. Plenty of options. Listen to this podcast for some great ideas as well... https://itunes.apple.com/us/podcast/biggerpockets-money-podcast-how-to-invest-for-financial/id1330225136?mt=2&i=1000431021095. It may take some time, but you can do it...
@Sheila Campbell I first found the deal then presented it to my potential partners. I explained how they would be making their money back, ROI, exit strategies; basically an operating memorandum for a small property. It hurt a little to give up a chunk of the cashflow but I've gained the experience of forming and maintaining a partnership while also getting to draw from the past experiences of my partners as well.
On another note, since you are military (I am as well), you should look into the group Active Duty Passive Income (ADPI). Those guys are all military investors (officers and enlisted) who have built their real estate portfolios while actively servicing. They have been invaluable sources of knowledge and experience for me.
Also, just because you used your VA loan doesn't mean you can't use it again. You have up to a set limit (which is based on the state and federal rules) and if you don't use the full amount, you have the remaining balance available. For example, I bought my house in VA Beach for $235k. My VA loan limit is $460k so I still have about $225k available to buy another primary residence if I desired. And if I wanted to regain my full VA loan amount, I can refinance out of the VA loan to a conventional loan and start all over again.
Originally posted by @Barry Thaler:
How did you get so much credit line?
If you are military and have half decent credit you may be able to buy a primary home with no money down on a VA loan. Live in it for a year and buy another same way. This may not be the ideal way to go about it according to some, but it's a way to start.
Sell your current residence.
Use equity and new VA loan to buy 2, 3 or 4 unit property. Move into a unit, rent the rest out.
@Sheila Campbell
That means you qualify for a VA loan if you're willing to house hack for a minute, right? 1% down is a lot easier to come up with, and I hear the rates are better. I'm no expert though.
@Casey Powers if you read above, you would see that I'm currently using my VA loan my on current resident
@Tyler Mullen can't. I'm moving in less than a year. I have to live in that complex at least a year. Plus I'm renovating my current home
At this post people are giving the same advice and some of you aren't reading. Which is causing me to repeat myself. Please stop commenting if it's nothing new. Thank you
@Karl Schnitzer
What is an LOC? Your post was interesting and how can you a cash advance and not be charged as such?
@Sheila Campbell I'm not gonna bother telling you things that most of the others have said but what I will do is I'll share my experience of trying to purchase a property with no money down. I had virtually no money for a down payment however I did find someone through BP who claimed there was enough equity and they could bring funds to the table to close. Long story short the person vanished and the few thousand I did have I lost out as earnest money deposit. My recommendation to you is figure out what exactly is your goal. You can have a great investment portfolio by investing in REIT's and some start as low as a 10 dollar contribution. If you just want to own real estate for the sake of owning real estate my recommendation is too never purchase a property without a minimum of 3 months ideally 6 months of working capital. I've seen it time and time again where people rush into real estate ( myself included) and get burned due to not having money for things like a new water heater, roof, a tenant that will absolutely destroy your property etc. look at out of state investments if your local market is too hot ( I live in the SF Bay Area so I believe me I get it) do everything you can do to save 20% down on a property as well as finding a undervalued property in a great area or an area that will be up and coming in the future. Everyone's investment goals are different and what works for one person may not work for another. That being said I want to see you succeed.
@Sheila Campbell, I would suggest starting with wholesaling. Driving for dollar and probates. Look into these. Learn more about wholesaling, you dont need alot money to do this in the beginning. Build up some cash then you can afford some owner financing requirements. Once you have some more cash, you could even look into land investing to diversify...for land, follow Seth Williams. Educate yourself on YouTube and podcasts as you continue to grow...then implement more...website, VA from upwork etc.
Hustle it...learn about all creative financing strategies...Lease Option, wholesale lease option, Subject To etc.
This is once you have wholesaled some properties and have some 40k plus...at minimum.
This is doable, first educate yourself on those specific strategies then go to work. Impossible takes a week! Good luck!
@Sheila Campbell
To get started without $$ I suggest looking into wholesaling. I started deep diving and learning back in December 2018. Here we are March 2019 and I have TWO deals at escrow, one closing this week. The 2nd was just sent in Saturday. I am not guaranteeing you these same results, but I have not paid a dime for anything! Just a lot of studying and massive action.
Good luck!
@Sheila Campbell also, you're in NC, you should look up Max Maxwell on YouTube and check out his fb group Wholesaling Houses Elite.
@JeVauhn Wright LOC is a Line if Credit. Basically a revolving line through a bank like a credit card with a lower interest but not a credit card. And there's 3rd party sites out there such has Plastiq where you can pay for stuff using a credit card to people/companies/contractors etc. that don't accept credit.