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Can I Really Invest in Real Estate Without Money?

April 2nd, 2008 · 13 Comments

Can you do this business without money? Many late night TV gurus and seminar instructors seem to pitch this angle of real estate. In fact there are many people who have been deeply in debt or even homeless that have had success in real estate investing. But is this realistic? These people are the rare exception. My problem with this type of talk is it sets up unrealistic expectations. I think it is simply a way to get unqualified people to buy expensive programs and classes.

A better way to think about it.

Yes you can do this without money, but you can’t do this without resources. I does take money to do this business, but it doesn’t have to be YOUR money. We often talk about OPM – Other Peoples Money. This is an example of what I mean by resources, OPM is a resource. Some other examples of resources you may have are; time, partners, knowledge, a strong work ethic, credit lines, a good credit score, mentors, employees (kids?), private lenders, team members, or business equipment like a computer and Internet connection.

What Resources do You Have?

Think about the resources you have. Do you have no money but you have time and a willingness to learn? You could leverage that by being an apprentice to an experienced mentor. I work with interns and I am sure many full time investors would love to have a helper willing to learn the business or bird dogs to feed them leads or great deals. If you have no time you can put your kids to work addressing and stuffing mailer to motivated buyers.

The Two Key Resources.

Do you have more time than money or more money than time? These are the two most vital resources you have in any business. Think about these two key resources in particular. Ask yourself which you have more of; time or money. Some investing strategies take more time, some take a lot of cash. Knowing the resources you have, will help you decide the best real estate strategies for you.

To your success,

Ned

Tags: Beginner · real estate

13 responses so far ↓

  • 1 Allen Taylor (1 comments.) // Apr 2, 2008 at 12:34 pm

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  • 2 Eric Hundin (1 comments.) // Apr 2, 2008 at 12:48 pm

    I found your blog on MSN Search. Nice writing. I will check back to read more.

    Eric Hundin

  • 3 Amy Roberts // Oct 14, 2008 at 12:14 am

    I totally agree with both the visitors. You have really presented the article nicely with worthy information. I ll like to add something that is One of the most common false impressions about real estate investing is that you need a lot of money to get started. But what if I told you there are several ways to invest without using your own money? That’s right! Although property typically does require a pretty good chunk of money to acquire, it doesn’t have to be your money. Now, in my biased opinion as a full-time real estate investor, that is one of the great perks of the business!

    There are literally thousands of banks, lending institutions, and private individuals eager to loan money to those with some cash and/or credit. These benefits can be illusive, but there are still plenty of ways to finance a deal when you find the right one. After I got out of college, I used “hard money lenders” to purchase several of my first properties. These lenders rarely require any money down or even a credit report when the loan to value is low enough. Of course, you need to be sure you have negotiated the best possible price on the property in order for the deal to work (but that is another article, altogether). Hard money lenders usually lend up to 70% of the property value.

    Source: http://www.realestateguidance.org

  • 4 Adam Mahler (1 comments.) // Mar 12, 2009 at 3:34 pm

    While the information you provide here was good a year ago, it may longer be possible to get into this business with no money today. I own a real estate appraisal company in Valley Village, CA, and it’s been astonishing to see how drastically the price of homes has gone done, and continues to on a daily basis. That being said, if you do have your own capital and are interested in purchasing a home, this may be the perfect time, as they have almost never been as affordable. It will be very interesting to see what comes of the new plans Pres. Obama has put into place to save the housing market. Until then, I’m just keeping my fingers crossed.

  • 5 Ned // Mar 13, 2009 at 12:24 am

    Adam,

    Thanks for stopping by and commenting.

    I’d agree that getting traditional bank financing for 100% /no money down deals is a thing of the past. Doing no money deals now has to do with your knowledge, skills and creativity.

    How is the market where you are? Are you able to keep busy?

  • 6 alena (1 comments.) // Sep 13, 2009 at 10:18 pm

    nice writing, am really enjoy reading this! Thanks!
    .-= alena´s last blog ..Buying First House? =-.

  • 7 Ned // Sep 14, 2009 at 1:17 am

    Alena,
    Thanks for the compliment and thanks for stopping by. I hope you become a regular. – Ned

  • 8 Johnny (1 comments.) // Feb 21, 2010 at 12:48 am

    I would like to hear about hard money lenders that are still reasonable (interest under 15% and no money down,six months no payment).

  • 9 Ned // Feb 22, 2010 at 3:15 pm

    Johnny,

    Thanks for stopping by. In my area most hard money lenders have gotten much tougher with their lending criteria. They expect you to have some money in the deal. While some might do under 15% they would expect more points up front.

    But the Baltimore lenders I now aren’t going to lend in Atlanta. I suggest you ask at your local real estate investing association who the lenders are down there. I know there are some investor groups down in your area.

    You say you want no down payment, if that is because you have no money to put down, then rehabbing is not what you should be doing. Rehabbing takes cash – even with financing. Trying to rehab with little or no cash is a high risk proposition.

  • 10 Lynn Albro (1 comments.) // May 12, 2010 at 1:52 pm

    As Adam said, homes are more affordable in California, in our area (Central Valley) the value of a home has dropped as much as 2/3’s in some situations. However, first time home buyers are finding it hard to find financing, and banks seem to be more inclined to accept a cash offer. This IS the time to buy, but more than anything it seems to be an INVESTORS market.
    .-= Lynn Albro´s last blog ..Flipping Real Estate in Northern California =-.

  • 11 Ned // May 12, 2010 at 2:48 pm

    Lynn, Thanks for stopping by. Yes you are right it is very mush an investors market exaclty because many fist time home buyers can’t get financing. Investors often use creative or alternate forms of financing that don’t work for homeowners.

  • 12 Daniel Beer (2 comments.) // May 17, 2010 at 11:42 am

    Congrats on the great StumbleUpon traffic. I’ve been following your blog as I think you have been mine. Let me know if there is ever a guest posting opportunity.

    All My Best,
    Dan

  • 13 Offer Cover Letter // May 22, 2010 at 10:29 am

    […] check out this great article on investing in real estate without money.  It clears the fog from those late night […]

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