Where To Start If You Have No Money To Do So?
November 28, 2009 by Matt
Filed under "How to", Recent Posts, Success Stories
“Where to start if you have no money to do so?” is one of the most common questions I get. What’s tragic is it is probably the most common question not asked, as well. Fear of the unknown stops people dead in their tracks and they never get started in the most lucrative industry in the world. Fear’s biggest adversary is “confidence,” and with this post it is my intention to instill some confidence in you so that you can move forward and begin to enjoy all of the time-freedom and money-freedom that successful real estate investing can provide.
Investing strategies like “wholesaling,” “subject-to” and “joint ventures” are the ideal launching grounds of a real investing career for those with minimal funds. Wholesaling is the ideal strategy, particularly for those that are independent and might shy away from working with a partner(s). In a nutshell of wholesaling, all there is to do is locate a property well below value, tie it up with a contract and then assign the contract to another investor. Typically, a wholesale fee of $2K to$10K can be expected, but at the end of the day… there are no rules or limits to how much you can make wholesaling. The name of the game, however, is “volume.” Wholesaling 3-6 properties per month will generate a significant income for most. Once your capital is built up, you can start looking at other types of investment strategies and opportunities… YOU are in the game!
Recently, I mentored a student, Christian Martinez, in this very strategy and after two successful wholesaling transactions he had put in his pocket more money than he makes the entire month working 40 hours a week in a bank. You can see below that he was quite happy with his results.
Investing in real estate using a strategy known as “subject to” is a fantastic way to get started with minimal funds. Using subject-to, you will have two “no money/no credit needed” exit strategies. You can either use your wholesaling experience to make that quick buck or you can hold the property to earn the long-term residual buck known as “cash flow.” I will caution you, however, should you decide to hold the property for cashflowing purposes, it would be wise to have some sort of money partner (or resource) for maintenance, vacancies and incidentals.
In it’s most simplest form, taking ownership of a property subject-to is used typically when a distressed homeowner or investor needs out, and needs out fast! In order to solve this seemingly more and more common dilemma these days, the property owner would transfer title to you subject-to the existing loan on the property remaining in the name of the property owner. You would continue to make payments in the interest of keeping the loan in good standing so you don’t have to apply for your own loan. There are many rules and a protocol to follow to successfully execute this strategy, but that would take up an entire post all by itself. Perhaps I will do that soon? Warning! Do not try this strategy for the first time on your own. It takes comprehensive knowledge of real estate law, lending laws and business ethics to keep yourself out of trouble and most of all… turn a profit.
This very strategy turned out to be my business partner’s, J Massey, first transaction. He acquired a property in Riverside, CA using the subject-to strategy and has been able to generate positive cashflow for over a year now. He has yet to spend one dime of his own money on this property as the cashflow from the property has taken care of every expense. Not bad, eh? A property for virtually free!
What allowed me to get in the game of real estate investing was getting involved in joint ventures. A joint venture is simply a “venture” in which there is more than one investor involved on the same side of a transaction. I found early on in my investing career that what I might have found as an insurmountable challenge for myself [like $0 dollars to my name] is the easy part for someone else, and vice versa. What I had plenty of was “time and knowledge” which I’ve come to learn that that is an insurmountable challenge for others often due to lack of time or interest in getting their hands dirty. Through an amazing network I stumbled across, I’ve been able to build several mutually beneficial joint ventures which have allowed me to progress at a faster pace than I had ever imagined I could.
Hopefully, I’ve demonstrated by learning to earn in these three investing strategies YOU can get started in the real estate investing game with minimal, or even $0, dollars. Wholesaling, subject-to and joint ventures are strategies I still implement today, and they are strategies you can begin to implement right now regardless of you financial position.
“Where to learn how?” or “Where do I find a network of investors to partner with?” might be two questions at top of mind for your right now. There are several options out there with regard to real estate investing education and investor communities. I advise you to look around and ask lots of questions. My advice is to trust your gut, and trust it quickly when interviewing people and organizations that you might consider for education or mentorship. I’ve done plenty of research on the subject and I decided to get involved with a great company that provided me with a first class education, sound real estate deals, a source of interim income and an amazing community to support me. The three factors that have really stood out for me confirming that I made a great choice is 1) this company has done everything they said they were going to do, they have really lived up to their word; 2) after my initial investment, they never tried to sell me anything again, it has been a 100% educational experience as opposed to the plethora of “pitch-fests” that are out there; and 3) the investor community that I get to interact with has been nothing less than extraordinary and literally made all the difference in my results.
If you’d like to add the company I chose to those that you’re researching, I invite you to attend their free workshop. You can register at http://theinvestorintroduction.com/ and be my personal guest 
What ever path you chose, be sure you take action. We are in the middle of an unprecedented market place that offers more opportunity than we’re likely to ever see again. What I mean by that is… don’t you wish you bought 20 homes 20 years ago? What will you say 20 years from today? I’m glad I did, or I wish I had?
Until next time… Happy Investing!
