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Short on Start Up Cash?
How You Can Get Started in Real Estate Investment Without a Ton of Capital
How much money do you think you need to invest in real estate? $10,000? $20,000? More? What if I told you that you could start investing in property with virtually nothing at all?
Many people cite lack of funds as a reason for not getting started in real estate investment, even if it’s something they really want to do. And, to be fair, it sounds like a good reason, because we all know that it takes money to make money.
But there are lots of ways to get around the whole “no money” thing.
Let’s talk about those.
Wholesaling
This is a great option for people who are motivated, knowledgeable about finding great deals, and can network like a pro. A wholesaler is a person who locates a good investment property, gets it under contract, and then sells that contract to another buyer for a fee. Basically, they act as the middleman between the seller and the ultimate buyer. Everyone wins in this situation, too - the seller is able to unload their property, the final buyer scores a great investment without having to do any of the legwork to find it, and the wholesaler walks away with a few hundred bucks for facilitating the transaction. Easy peasy.
Partnerships
Maybe you don’t have enough money for a down payment, but you’re a skilled contractor or even a licensed real estate agent. Either way, you have something to offer, and joining forces with another person who DOES have money could potentially pay off for both of you. Entering into a partnership is a great way to get started, so long as you and your partner are on the same page. These unions can be a beautiful thing that pay off handsomely for both parties involved, but I’ve also seen them turn ugly. If you consider a partnership, the key to success and satisfaction for all is making sure that each partner is clear on their role, is willing to fully commit to the endeavor, and will do their portion of work to meet shared goals.
Hard Money
A final option for would-be investors without a lot of cash is to seek out hard money. Hard money refers to a loan from a business or individual who’s not a bank or other financial institution. Basically, these lenders are in the business of loaning money, and that’s it. They have the funds, so why not loan them out and enjoy the interest payments and other potential perks that come with it? They don’t care how much you have in your bank account, and they’re not going to dig too deeply into your credit history, either. All they care about is whether or you not you can make the payment on the loan.
But what if none of those appeal to you? Then what? Here is my recommendation: don’t start investing right away. Instead, focus on educating yourself on real estate, investing, how to find profitable properties, and anything else that falls under the property investment umbrella. The more you know, the better off you’ll be when you DO start purchasing property.
Another way to get your foot in the door is to start working in the field of real estate. Some of the job options include: agent, appraiser, contractor, or investor’s assistant or intern. Not only will this increase your knowledge on the topic in a major way, you’ll also be making an income (which you can start stockpiling part of to build up your capital) and making important connections in the industry. All of these are ideal ways to pave your path to real estate investment.
If you want to get involved in property investment but don’t have thousands of dollars saved up, don’t let this be your excuse to not follow your dreams. There ARE ways you can start investing, or at the very least, get started down that path.
Comments (4)
Try hooking up with a great realtor and have them hook you il with an REO portal. Your email will blow up but the deals are there. Do your ground work and do lots of drive by's. A good realtor will have your comps for each house you see. Finding the deals are the easy part. I find it harder to find the money only because I'd rather deal with private money. After 27 houses done for the middle man investor, I'd much rather go straight to the source.
John DeVito, almost 8 years ago
Thanks for this helpful article Sean. I have a mentor and a investor I partnered with, however, I am having the hardest time finding him a deal he would invest in. I got one that was almost a go, however, the handi man was not able to connect with the seller, therefore, nothing came of it.
I do not have any cash to invest. I am trying to find more investors that may want to use my hunting skills.
Jennie O., almost 8 years ago
Hi, Sean I am looking to find out how i can buy a property wholesaling. I am new just starting out. I live in Waynesoro,PA
Lawrence Patterson, almost 8 years ago
Research and hard work, my friend!
Sean Tarpenning, almost 8 years ago