You DO Need Money To Get Started In This Business!!!!!
Hi:
Okay, I'm probably gong to ruffle some feathers here, but I think that all newbies need see this business from a realistic point of view. From my experience, I have found that it is nearly impossible to get into this business and be successful with no money. Yes, you MAY be able to secure a piece of property with little or none of your own money, but everybody forgets about MARKETING! Without it you have NO properties to get under contract and marketing takes money. Even if you are going to be a bird dog or wholesale property, you need money to market to investors and motivated sellers. You may be able to find investors at rei club meetings, but finding motivated sellers takes money. Whether you decide to drive for dollars(gas, property searches, skip tracers, letters), use direct marketing(postage fees, mailing house fees), run an ad, do bandit signs(printing fees)---you have to plan for an expense anywhere from 100.00-500.00 dependng on what you decide to do. Now I say all of this NOT to discourage anybody. I just feel like information is power and if you start this business with realistic expectations, you will plan better and not het disillusioned when things don't work out as easily as you would have hoped.
If I am wrong, call me on it. But experience has always been my best teacher......
Good Luck
[ Edited by results_one on Date 03/11/2004 ]
I couldn't agree with you more. The no money down pitch is so appealing, but the reality is, this is a business, and any business has a marketing plan, and any marketing plan requires DOLLARS to implement so you can bring more dollars in to grow your business.
results_one,
Good post, but I believe that NO MONEY DOWN is the claim. You DO need money just to have a computer to get on this site. Come on, if you can't get $100 together, then I don't know what.
ok, i will call you on it. this is where you started going wrong.
>>From my experience, I have found ...<<
hahaha. not knocking you at all, you're just trying to be straight up and i can appreciate that. but if you keep your basic living essentials you don't need another dime. if you keep a roof over your head and a phone line (to get on the web and answer/make calls), you don't need anything to start. i speak from "my" experience. get online, call some banks do some phone legwork and when you bump into a bank ask them for reo or defaulted properties that are looking to be shorted. do your due diligence (all from a pc) and put an offer in (hud-1 forms are free online). back and forth until an offer is accepted, then get back online on a bulletin board site and post for free, your deal. never left the house, spent 1 dime beyond what you normally spend if you're looking at this site and you set up a blind deal. now advertise for a buyer.
keeping on the phone all day of every day meeting folks on this site and calling ads from the paper (which you can read online too) to speak with people, generates work. free advertising and the most influential too - mouth to mouth.
i'll stop with that. it's entirely possible to deal with no money out of pocket, you just haven't done it yet. it'll come!!
good luck back to you man!
Knowlede Junkie:
I understand your point. I can and have raised way more than 100.00 for my marketing plan. However, think it is important that we speak in plain english to people just starting in this business. I have read plenty of posts where newbies were told that they needed no money to get started in rei--and I really disagree. No Money or no money down is just a play on words, I'm trying to explan what really happens when you begin to make your rei career a reality.
When they say no money down, they mean you don't need to have thousands and thousands of dollars just hanging in the bank account. Yes, you may need a couple hundred, but on the scale of what is to be made, its practically nothing
[addsig]
results_one,
Good point & I see what you are trying to say, buuuut any newbie SHOULD be realistic about spending the bare minimum of expense here. I think it's a given. Kinda like when you say you can get info FREE on the internet. You still have to spend $ on a computer, internet access, a phone line, a desk, etc...
but I do see you point.
-Paul
i gotta go with results on this one! even buying your courses can cost a ton...and let's just say you do get that short sale, well unless you can assign your contract (and often this isn't allowable from the bank's side), you have to bring money to the table to close (often times). then you are back to the marketing that everyone is referring to. we are in the pre-foreclosure side and we have always had to make up back payments, give the homeowner walking cash, and clean up their mess so that someone else would want to live there, depending on what your idea of rehabbing is, that could get ugly! i've also found that many investors aren't crazy about a quick flip from another investor, because they view the investors spread as money that they could've had.....
we have yet to get in with the $10.00 consideration, and found a lease-option buyer with $12,000. down( or anywhere close to that, for that matter)! okay, enough people are saying that they have done it, and that i do believe, BUT i think that someone fresh-out-the-box or even myself for that matter, wouldn't have the "know-how" to pull it off!!!!???????
"No money down" simply means "none of your money down". Find a partner, get a place under contract and flip before closing, put an offer on a property and get a tenant buyer prior to closing, use their option fee as your closing costs and down payment (if needed). I even called some realtors and offered them $500 if they refer a person to me for my lease option that they couldn't get qualified into a house, didn't cost me a dime to do that marketing. Be creative, and most inportantly, "necessity is the mother of invention", meaning if you're broke, you will find a way to do this no money down, because you have no money. If your not broke, of course you'll spend some money, because it's easier, and it's there.
Yes anything is possible. It is POSSIBLE for me to jump off of a cliff and fly, but I better have a parachute to help me land safely on the ground. In real estate your PLAN(which should include some excess cash) is your parachute--we all need one. So just in case we are not as fortunate as Jackman or some of the other seasoned investors we wll know what our next step should be.
Just don't want people to miss the point of what I am trying to say.
Thanks for all of the feedback--I look forward to hearing more opinions.
[ Edited by results_one on Date 03/11/2004 ]
Probably the same thing I just read above, but...."You don't need money to invest in real estate" Doesn't mean you don't need any money, it means you don't need thousands...infact I'm sure of it I did just read this above.
It's an investment, you have to put money in it, whether it's marketing, closing costs, or money down, etc
Seriously here, "gas money" ? If someone is going broke in RE Investing from spending too much money on gas...save your money, buy a course , & learn how to pre-screen sellers because you're obviously wasting time going to see homes being sold by non- MOTIVATED sellers.
If you really want to invest in real estate without spending a dime... I think it could be possible. You don't need to buy a course (You can learn Most of everything you need right here on this site using the forums and Articles). As stated above you can invest in real estate by using the internet, spending no money advertising.
If you're curious about a post, or just don't understand what the heck someone is talking about, you can message them and ask them to explain.
I can't say I have spent zero dollars, but the majority of my RE Investing expenses goes to marketing or learning.
Ok I am seriously rambling here, because I don't even think I want to read through my post (it's so long).
Here is a good way to get MY own point across (that has seemed like it could take up 50 pages of paper ...print at your own risk):
"Learn about it, read about it, and talk to people who do what it is what you want to do....then you will know how to invest in real estate without having money"
Could be wrong, maybe not.
JB
[addsig]
Personally I have never had what I could call "Excess Cash" I've always been able to find something that needed it. What I have been able to do on occasion is set priorities that allowed me to use some cash to invest either in myself (education) or come up with $10 or so to put down on a property.
It does take some money to do this business, but it does not necessarily have to be yours. There are costs associated with everything you will do in life. So be it!
I would like to say "money smooths the way".. and makes it possible to do more deals etc.
I don[t worry about the marketing however, 100-500 is nothing that almost anyone cant come up with.
Second, you could have a realtor list it if you can't get the $500
I agree with you, it carries through in so many other ways too.
While so many of the guru tactics are possible, they just about become impossible in reality.
One of the mantras you hear over and over again is "cash is king, cash is king, offering all cash can get you a bid discount over the next guy who is not offering cash" we all know the stories of how somebody here will post about how they get such huge discounts or even get the house when their offer was lower than the next guy because they offer cash.
Where I am at, offering cash gets you nothing, there are so many people running around able to write checks for their REOs and rehabs that cash is far from king, maybe not even in the royal family at all, maybe a distant duke in a far off land.
I remember the first time I dropped the, "My offer is all cash, no financing contingency bomb on the bank" I was waiting for their eyes to go wide and stuter their reply, or get excited. Instead the reaction was, okay fine. I had to ask him if it wasn't in fact unusual to have a cash offer and he just looked at me like I had 2 heads. He informed me that almost every investor they deal with is always working with cash offers.
The books, the tapes and the gurus are hardly relevant in all circumstances or markets.
I think the "No Money Down" thing is played out for one simple reason everyone loves MONEY! no one is going to give something for nothing. I've been trying harder than heck I've bought every single course out there but guess what no properties under my belt yet! I get the same ole questions from lender...Do you have any assets? No stupid thats what I'm trying to do! Do you have any money down? No thats why I came to you with a property thats 80% below market value! How is your credit? Bad thats why I came to a hard money lender! if your anything like me everybody you dont have any money,bad credit,laid off my job,homeless,and dont even live on the bus line to get a job Real Estate is the hardest thing to do these companies do not care about the equity in the property just if you have decent credit and how much your going to invest my advice try to look for a private lender who will put up the money for you so they can get a 12-18% return on there money I cant even come up with the $170 to put an ad in the paper!
[addsig]
Is this Fair to say?
When you're just starting out...keep your
day job (or get one if you dont have one), and dip in a little here and there until you have the capital from the little things to do something big.
JB
[addsig]
steadydoses,
Have you just been trying to Wholesale houses? Have you tried Sub 2/FSBO & L/O? I'm still a newbie, but it does stand to reason that there are a lot of people who do need to sell there house fast for whatever reason.
I think with that info in place and a good marketing system that can seek those people out, you should get a deal. I'm trying to stay positive because there is a lot of nay-sayers out there. I got Carlton Sheet's program like 10 years ago & for one reason or another, I've let excuse run my life. NO MORE.
I will not LET THAT HAPPEN AGAIN! Good luck to you, but I AM GOING FORWARD.
-Paul
Steadydoses,
Sorry to hear that it's been pretty rough for you. I know somewhat how that can be. But, keep hope alive! It'll get better, just continue to work hard, and maybe try other strategies. Remember those encouraging stories like Abraham Lincoln (who failed many times before he succeeded). Just don't give up on good things. Yes, find out if Real Estate Investing is for you, and if you believe it is keep at it until it works! I am, and what helps me is I pray, and trust the Lord's help and mercy!
As to the question of this Post "Do you need money to get started in this Business?" Realistically, you need money to start in almost any business, but you can invest in property with no money down, or no money of your own.
These are just my views on it.
Stay connected!,
Kathleen
I agree with the original post. Most new investors don't realize that even with "no money down" you still need an ernest money deposit, insurance, appraisals,carrying cost, marketing, and whatever miscellaneous cost will arise. Investing is simply what it's called, investing. You do have to put up some money up front. Maybe not a lot, but to think you can realy do anything in this business without coming out of your pockets is not realistic.
Kind of ironic, but the new guy who has the most need to be able to pull off a deal with very little out of pocket expense isn't as likely to be able to get it done as a guy who has been around the block a few times.
I'm going to have to weigh in on the side of it does take money to get started, the no money down stuff sounds great and may sell books, but I think someone being able to actually get it done is the exception not the rule. Take my opinion for what it's worth, I've done a grand total of 4 deals so far, so I'm far from an expert. I do know, that if I was trying to get something done with no money output I wouldn't have any deals done yet.
Rehabinator...first of all, I've read most of the site, always find your posts to be worth reading, thanks. That said...In your post on this topic you say that making an all cash bid doesn't gain you anything because so many people are bidding all cash. I am a cash bidder myself and see your point, but I think your very point can be viewed from another angle...with so many cash bidders maybe cash isn't king, but that makes the lack of cash that much more difficult to overcome.
Mykle
I do understand your post, but have to differ. I'm in the process of selling a house which had no money out of pocket (found an investor wikking to loan money on the property with it as colladeral.) rented it with a 2 dollar sign for a year. And will sell it on a contract (also with a 2 dollar sign) and flip the contract. all on the ****Must Reach Freshman Investor status before posting URL's*** end my story short I will clear $35000 in one year. so it can be done. be creative and good luck.
Ross
All I am going to say is whoever started this thread had an inclination to start a debate. We've heard stories of people who don't need money to get started, but we've heard that most people need a few hundred bucks or so to get started.
If the answer isn't clear by now I don't know what is. I couldn't even read all these posts because the topic changed like 10 times ha ha. Are we done yet?
"no money down" simply means "no money needed for a downpayment " which can be done if you are dealing with a willing fsbo that will carry the note but this is rare but can be done , ihave done it. you then have closing costs , attoney fees ect. people that have little knowledge of buying realestate assume that this means that they can make a transaction with no money at all. this is not the case. kenmax
Well here goes. I personally would not be able to take the stress of starting a business with NO MONEY. A hobby maybe.
I agree with Results One, if you don't have any money how can you survive? But I will give you a list of things better than cash on hand to start:
1) Credit: People with good credit are able to get unsecured lines of credit to start out. Also the SBA will help.
2) You must have a budget and live 75% below your means to "pay for your expenses".
3) OTHER PEOPLE: You can market your skills to them for a fee and save.
4)Join a REI club. I've seen so many people be a "GOPHER" for a seasoned investor and find goods deals while earning money on the side.
5) Concentrate on one field at a time, master it, then move on. You can not possibly learn everything at once and be good at anything.
6) Start slow BUT START.
7) Keep your primary job.
NETWORK.
Results will come. But only if you make it happen.
There are three types of people:
1) those that let it happen
2) those that watch it happen
3) those that make it happen
In a thousand mile journey, the first step is the most important
Lori
Just my 2 cents
[addsig]
Quote:
I get the same ole questions from lender...Do you have any assets? No stupid thats what I'm trying to do! Do you have any money down? No thats why I came to you with a property thats 80% below market value! How is your credit? Bad thats why I came to a hard money lender! if your anything like me everybody you dont have any money,bad credit,laid off my job,homeless,and dont even live on the bus line to get a job Real Estate is the hardest thing to do these companies do not care about the equity in the property just if you have decent credit and how much your going to invest my advice try to look for a private lender who will put up the money for you so they can get a 12-18% return on there money I cant even come up with the $170 to put an ad in the paper!
steadydoses:
i hear u man! but keep pounding the keyboard ... trust me. i'm not one of the newbies here whose first deal netted 50k in 2 weeks. my first deal was found and settled 8 months after starting, so those are real numbers for me. and guess what i did before i finally found something and got it purchased (not even sold yet) - nothin! i didn't have 2 pennies to rub together.
results_one:
>>So just in case we are not as fortunate as Jackman or some of the other seasoned investors <<
wow. no one's ever blamed me of being fortunate! actually quite the contrary - my nickname is "bad luck jack" and my mantra is "behind the 8ball". nor am i a seasoned investor - i'm in the daily grind to try to pay bills and eat steak like most others. but thank you for the positive words!
Look, I bought 6 houses today no money out of my pocket at all...PERIOD, I spent absolutely nothing. Now if you want to get techinical, yes it took maybe 1/16 a gallon of gas (which is 1.80/gal approx here) and yea maybe the phone call costed me half a cent.
So you know what, I did it today, I spent not a dime of my own money, I will not be pulling money out of my checking or savings for closing, infact Im getting cash back at closing. If I were homeless and had to find 35 cents for a phone call, and look in the trash for a classified section of the newpaper...I still could have pulled this off. I'm not going to get in details here...YOU NEED TO LEARN.
But in response to your post....Yes you can invest in real estate for NOTHING!!
Think rehabs, hard money, and section 8.
Good Luck
JB
[addsig]
You're right....It does take money to invest in Real Estate, because real estate investors need to eat when we're hungry, pay for gas, a telephone line, and a mortgage/rent/motel payment so we don't freeze to death.....but not any more than that. It's not always free or easy to LEARN the ropes, but once you do you can do this business without using any of your own money.
JB...Thank you!
kenmax....You hit it on the head.
"no money down" referes to a down payment NOT marketing costs, appraisals, etc. Even then, look at every expense and figure out how you can avoid it, get it for free, pay for it after you close, or have someone else pay for it.
Come on, my friend, be creative. Let's say that you decide that you absolutly need 200 fliers (which you don't) and you don't have $20 to your name (which you do) or a credit card (that you probably do as well). Seriously..... Anyways, Tell the seller that you'll strategically market his home, and all he has to do is pay for 200 fliers to be printed. Or you could go door-to-door in the neighborhood and ask if they know anyone that wants to live in that area. Go door to door asking for magic markers and white paper that you're going to donate to schools. Hand write signs to put up at the grocery store.
Find a good deal, and the money and buyers will practically find you.
There are ways to do this business that don't require ANY advertising at all EVER, and you'll have buyers and sellers calling you all the time.
Let's say you had an assignable contract (cost you nothing) to a $200K home that you could buy for $100K and you were homeless. Don't you think you could find someone who would buy the contract from you???
Investor meetings
TCI
list with a realtor (pay them at close)
Partners
Use referals (lenders, realtors, title companies, call "I buy houses" signs)
free online listings
free paper listings (thrifty nickle)
strategic partnerships
Money gives you more options than you may not have had otherwise.
Just because YOU can't run a 6 minute mile doesn't mean that NO ONE can run a 6 minute mile.......And with some training, so can you! [ Edited by hibby76 on Date 03/13/2004 ]
Using OPM (other peoples money) is "no money down". I mean, geez, that is the core of it really. You all agree with that right?
I will give you an example of a real no money down deal that closed Wednesday of this very week. We can all talk of theories but I like real life, recent examples.
This deal was no money down (OPM) for both parties. I bought a house at the end of February that I found through one of my birddogs. In this case, the birddog was a licensed RE agent who got her fee from the seller. Anyway, after some negotiation I buy this $70,000 APROX. Market Value, nice, block, newer house for $29,000 from the wealthy "don't wanter" owner. It needs some fixing up. You know the drill, paint, carpet, a plumbing leak etc. I pay for the house with my home equity line of credit (banks money).
I had met this great young couple through TCI who had seen my other properties on here and called me. I told them about this property and showed it to them. I told them I paid $29,000 (they asked me) and what I wanted to make. I also told them was not going to spend one nickel on it and would sell it as is. They beat me down on the price some (Kim, you are ruthless, girl! ) but we closed wednesday for $45,000 plus they paid all closing costs. I pocketed a clean $16,000 with zero of my own money in a few short weeks time.
They used a Home equity line of credit (OPM) to buy it from me "no money down". They already have leads for the house for buy/rent/hold investors (who had called me) for much more than they paid. Win/win deal and a great example of "No money out of pocket" or "no money down"
Doubt this story? Want to see the closing papers? Let me know, or check the Sumter Co, FL property records. It is all there. What I paid and what I sold for and how fast.
Don''t tell me, or the Rogers of family of Central Florida that you can't do deals with no money down! [ Edited by Ricker on Date 03/13/2004 ]
I know just what you mean STEADYDOSES . I tried to borrow 50,000.00 to buy a 80,000.00 condo and the bank wanted to know about my income . in case i couldn't sell it. The property in this developement has never been on the market over 90 days .I told him just loan me the money on a 90 day note .
I am 20 years old and I own 4 properties. I have not put any money down on any of my properties. In fact i'm up $7,000 when it comes to closing. I almost bought two houses the other day with no money down. It is very possible to do deals with no money down. The thing most people don't realize is that it is not easy. If you work at it it will happen though. If you have to have the mindset that YOU WILL FIND A NO MONEY DOWN DEAL, you will. If you have a mindset of maybe if I'm really lucky i might possibly be able to find a no money deal, then you won't. Seek and you shall find.
Oh my God!, Steadydoses, you have nailed all my fears. It's hard for me to see how anyone can do this without any dough and even so so credit and no job.
[ Edited by REMYZAZU on Date 03/13/2004 ]
A lot of success and life comes down to facing our fears and moving beyond them.
I am 40 and have a higher fear factor than I did 5-10 years ago, but I "don't take counsel of my fears".
I personally know 4 people that have done millions with no money down. They now have millions in property and money coming in, unfortunately they had to let a lot of good deals slide and they are having to build equity at a slower rate.
Not having any money and NOT needing any money are two etirely difert matters to contend with.
Can you do a NO money deal? Sure, but what really is "NO money"?
From all the posts you will see, even Ricker's post, you will need SOMEBODY's money. period.
Quote:
On 2004-03-13 13:27, TNTRASH wrote:
I know just what you mean STEADYDOSES . I tried to borrow 50,000.00 to buy a 80,000.00 condo and the bank wanted to know about my income . in case i couldn't sell it. The property in this developement has never been on the market over 90 days .I told him just loan me the money on a 90 day note .
Ok well, in this case you could have contracted the property and sold the option to buy it to another buyer. Contract it for $50k (or negotiate it down...) and sell it for $65k - $70k, and you could have collected a check at closing for $15k . Ran an ad in the paper "Condo, ...whatever you want to say about it.... worth $80k, must sell $70k obo, 555-5555" and you're phone would be ringing!!! And you would have some money to work with for your next deal.
JB
[addsig]
Tinman, hibby, Ricker............thanks to you all for such inspiring advice. I have to say that I stay "tuned" just for that reason, your seasoned advice and inspiration. Someday I'll give my success story!!!
The reason for the no money down furror is because there are a lot of people out there who don't have any real money but have a lot of dreams. So for $12.95 or whatever they can buy a book that feeds their dream. As a result somebody sells a lot of books. And a lot of newbies are running around trying to do deals by some formula they half understood and half memorized.
In spite of that I'm still going to hold out for yes you can do deals without any of your money. But if you don't have any money you'd better have good credit. and if you don't have any money or any credit you'd better have a heck of a lot of know-how. Or know-who. Short of that you'd better be willing to work like a sob for a while till you get smart or get good contacts. Unfortunately most of the no money down guys aren't telling people that.
Why dont we just call it "Buy Real Esate With Some Money Down, If You Can't Find One With No Money Down."
I started out with $2500 deposit on my first property in Dec 2000 valued at $ 85,000.
I got a $15,000 interest free loan from the local Government as a first time home buyer, which helped me qualify with my virtually no score FICO, for a 1st loan of $69,000 from my local bank.
I was on a salary of $22,000 at the time.
The loan was conditional that I attended training seminars run by the Govt. free, and taught me all from Renting to Owning, Working with Realtors, Lenders, Appraisers, Insurance Agents, Building Inspectors, Negotiating Price, Repairs, and many aspects of whats involved in becoming a home owner.
They worked with me on the first purchase and it was a safer road than going it alone.
I now am on a little higher in my salary, but not much, yet I managed to buy two more properties within the next two years, which gave me a good return on my investments including the rising equity and rental income.
I then sold my first home and profited over $50k. Now do you think the banks will lend to me?
I bought two more properties last month and today my FICO score is way up there as I manage my money on a strict budget, I pay all my bills on time and credit cards in full.
Within four and a bit years I now am offerred 100% loans on properties I buy, 100% Lines of Equity (which I only use if I need to close fast) and I ask for no money down options from lenders I approach. Some say yes, some say no.
If I was to now use conventional methods, I still would not qualify under normal lending criteria.
I just shop around lenders until one is on the same wave length as me, understands what I am trying to do, and I ask the lender when they quote me the interest rates and payments, if they were an investor which option would you take,
I ask this of about four lenders, do my maths, and if income vs expenditure is greater, I do the deal, but I always, always have a back up plan, in case I lose my job, tenants or became ill.
My portfolio stands at just over $1m which aint bad for someone whom had to borrow to come here in the first place.
So if I can do it, anyone can.
You need discpline in your spending, fearlessness in your approach for negotitaions, fairness in your deals, and self contentness on what you have done to the present date.
Don't forget to step back and smell the roses too.
Just my $.02 cents worth.
Happy Investing
First of all, let me say that I respect those who have responded so far as being among the most forthright and knowledgeable posters here.
Forgive me if I add to this the obvious...
"Time is money!"
Who among us hasn't heard that? And it's true.
If you're willing to spend the time calling ads, knocking on doors, driving neighborhoods, etc. etc. etc...then you can do deals for none of your money and no marketing expenses.
Personally, I've never met anyone who was willing to actually do all that. Yes, many claim that is what they do but, on close scrutiny they really don't.
Yes, you can make the claim that "no money down" is the real thrust of the guru claims. Technically, that's what they say.
But that's not what people hear.
So your point is very well taken. The costs of marketing, advertising (they're not the same thing), pencils, laser printer ink, etc. etc. etc. are all costs of doing business.
If you really believe that you can embark on any truly profitable business without a SUBSTANTIAL investment in time and money...I have several MLM opportunities which may interest you.
REALLY...you can make milliions from home with no cost or effort!!!
PM me if you're interested.
(Irony intended)
in response to jackman's reply, you might be able to do no money real estate deals if you dont have a day job. but you
still need money to pay the bills while you wait for deals!!!
i paid $5K in closing costs for a 270K property and it hurt spending $116 for a 3 day ad in the paper!!! plus i got a
much better response from a website i created for 4.95/mo
on yahoo geocities and which i marketed for free onine!!!!!
but thankfully the property's gone up 30K so i can get my
$116 back