A REAL newbie

what about all the people on here who say you dont need money or credit to invest in re, although it does help?

When I say no money needed. I mean no more money than the average Joe living week to week on a paycheck. Someone who can clean and paint or has a few friends or family that can help with some cheap labor.

You can become an investor but you may be backed into a corner as to what kind of deals you can do.

A lease option can be a good start. You lease a property with a sublet clause (meaning YOU can re-rent it to someone else)

You also get an option to purchase the property during or at the end of the lease term for a set price.

You can also give THEM an option to buy the property from you for a higher price than your option.

You get the property, clean it up real nice and re-rent it at a higher price. Don’t tell me it can’t be done. I did it. You just have to find the an owner who will do it.

You may have to come up with security deposit and 1st months rent. But your tenant will be giving that back to you when they rent it from you.

Is it risky? It can be. But if it were easy EVERONE would be investing and NO ONE would be renting. Overcoming that risk is what separates the talkers from the do-ers.

So, In summary, you need a little money, no credit, some determination …and you need to be a little brighter than a 10 watt bulb.


Thanks jeff,

as I have said before, while I can come up with hundreds, its the thousands that would be trouble (especially since my move will cost me thousands) I plan on doing this with my cousin (who I will be staying with in at his house.) He is handy with alot of things. (i can paint and do cosmetic work) but he is more handy at fixing things up. A lease option seems to be the way to go, or at the very least, when I join the local reic when I get down to north carolina, hooking up with a couple of investors from the club and wholesaling properties to them.

I am glad to see that someone else has done it. It gives me hope!! It seems that I have alot of work ahead of me (which I dont mind hard work) to learn the business and actually do it while im learning.

Thanks for your advice Jeff. I appreciate it alot. Anyone else out there care to comment?

cmacone is right. There are things that you can do in real estate without cash or credit, but it can in no way be called real estate investing or the business of real estate. You may not spend your cash, but you have to have the cash. I do no money deals where my money has to be shown, (six months of PITI) in order to get mortgage approval. I also do no money deals where I use my money for fix up, and I get it back after I refinance (90 days later), so I still have my money. But I do have to have money to start. Remember if you look beyond all the strategies discussed here, there are only two businesses in real estate investing. They are buy fix up and sell or buy and rent out. In either case, if you are doing it so that you can get yourself rich, you have to have cash and credit. The different strategies don’t present themselves often enough to allow you to build a business doing them. They are things that you can do while building cash and credit.

If you don’t have credit, that means that instead of sending your money to the creditors, you kept it for yourself. That means that if you don’t have credit, you must have cash. I you don’t have cash that means that it has gone to pay your creditors so you have good credit. If you don’t have either, that means that you didn’t pay your bills but didn’t save the money either. Business is ALL about understanding how money works. If you don’t give the money to creditors or savings, how are you going to handle getting $40,000 per month in rent checks but have mortgage payments due in 10 days of $30,000. Are you going to understand that the $40,000 is not yours and you need to either put it in savings or pay creditors? If you have neither cash nor credit. you need to evaluate if you have what it takes to be in business at all.

Well said Bluemoon, well said.

A lot of people on here try to discourage people away from investing by saying forget no money down.

You say yeah to no money down but it’s conditional with responsibility and good fiscal management. That’s at least better than “Can’t be done, period.”

Great post, Bluemoon06.

I’m here to tell you , you don’t a lot of cash or credit, and your better off without it.
Most newbies I see with cash and credit usually in up in bankruptcy, because they let some know-it-all investor talk them into buying their crappy houses that they themselves can’t get rid of on the open market.
Why? Because they have the gumption and the enthusiasm but no knowledge.
So move in with your cousin and find some specific courses on what it is you want to do and study, save your money, gain knowledge, advertise for MOTIVATED sellers (minimum fee), listen to their problem, and find a solution.
I had a lady call me that wanted out of her house because she had divorced and went to anther state for family reunion got pregnant by ex-boyfriend and wanted to move to be with him. She gave me her house (two loans at 106,000), 12,000 cash (that’s CASH), a 98 ford contour (THAT’S A CAR), and a 22 foot cuddy cabin boat (THAT’S! A BIG BOAT). She had excellent credit and a good JOB that was allowing her to move and work from home.
Her MOTIVATION was to be with the new daddy.
PROBLEM was to sell quick.
SOLUTION take over payments (sub-to).
STIPULATION - keep credit in good standing.

Now don’t get me wrong. Having cash and credit you can do a lot more deals and make a lot more money, but don’t let anybody tell you, you can’t or are not investing because you don’t have either.
I started out, quitting my JOB to get custody of my daughter, got robbed at another part time JOB, lost my credit rating, and bought my first house on land contract with $500.00 down. Payments 1,000.00 a month. His payments were 1,226.00 a month. Moved in to help with the finances. Cleaned, painted and leased out with an option to buy. 4,000.00 down and 1,300.00 a month. I then sold it back to the seller. All in all I pocketed about 17,000.00.

Two years later the tenants did not buy the house and the seller was getting ready to go to foreclosure. He called me again. This time after two years of studying REI, and a few deals, I bought the second mortgage (19,00.00) for 3,000.00. Made up the back payments (7,000.00 and now have a 160,000.00 home with a 100,000.00 mortgage.

PRETTY GOOD FOR NO MONEY AND NO CREDIT. (but that’s just my opinion)

I think the key is knowledge first, then MOTIVATION, MOTIVATION, MOTIVATION.
You find motivated people and you don’t need a lot of money or credit (refer back to - Now don’t get me wrong. Having cash and credit you can do a lot more deals and make a LOT more money).

PS I just paid off my old credit cards and am now on the road to recovery - meaning I don’t have to give away 25,000 in equity or wholesale deals anymore (refer back to - Now don’t get me wrong. Having cash and credit you can do a lot more deals and make a LOT more money).

Sorry to ramble on but I just got a little perturbed at some of the ideals that some were suggesting.
Why would any investor put 5 to 10 % down on a lease opt? People give theses away all day.

Good luck in your new venture.

Hi! First of all congratulations on your decision to invest in real estate! It has changed my life ten-fold in just 2.5 years. It only took six months and three purchases before I quit my job to work at home for myself. Of course, it helped that I barely made $1,000 a month. :slight_smile:
Anyway, do you really know that you have poor credit? Have you ordered your tri-bureau report with scores recently? Have you been denied credit recently? If so, what was the reason? Assuming you actually do have bad credit (most people think so, but don’t), then you may want to look at buying a house under a land contract (aka contract for deed) or a lease option. Start looking at vacant houses for sale as they usually have the highest rate of motivated sellers. The problem with the above is that usually requires a hefty down payment - often times more than a lender would require. I believe you said you have a good job waiting for you, so perhaps you can spend a few months saving up money. Do you have a 401(k)? You can take a loan on that. That’s something my husband has done. Having that money in real estate serves us better than in the 401(k).
Another GREAT thing to do is get your real estate license. You’ll learn a ton of state-specific real estate law and then be in the business as an agent (even if it’s just part-time), making connections every day. You’ll learn firsthand the motivated and even desperate sellers out there. I found in my dealings that being a creative buyer was easier because I was already a licensed real estate agent. That put the sellers at much ease because they trust I knew what I was doing, which I most certainly was.
I hope this helps! Reply if you’d like more help - I’m happy to assist.
Good luck!

Hi! I wanted to respond to your inquiry and my thoughts I believe are close to what Verdoclev was suggesting; make the move, get the job, find a place and lease-option it. If living with your cousins is dirt cheap for the moment then just sublease the house to someone else for a bit. Call around ~ find a landlord who’s tired of problem tenants and problem properties… Offer him a long term lease — say maybe 3 years, with the stipulation that if you decide to purchase it 10% of your rent payment will be applied to a down payment, and be sure to have an agreement in writing of what the price will be, ie. preferably something at today’s price ~ not some future value. Look around, I’m sure there’ll be someone more than happy to take your offer. Maybe you could do something with a duplex, make an agreement to rent the whole thing and then sublease one or both. The key here is to have other people making the payment on a property you control. Other people’s money ~ in my opinion is at the very heart of what true investing is and what playing the real estate game is all about. It’ll give you time to build up some seed money (equity) and clean up your credit. Now with clean credit exercise the option, sell it and move up to the next deal. Be sure to include in the lease that you are responsible for paying all the bills - including the taxes and insurance. In this way the IRS usually will allow you to take the mortgage interest writeoff since for all intensive purposes you do own the property (this last bit I got from a Robert Bruss article I read not too long ago). And don’t forget the two year primary residence rule. Ok, that’s all I got for you for now, Good luck Shanemarlo


Thanks Shanemarlo for your positive feedback, i was wondering if wouldn t exist anybody more with my point of view ( since it is quite simple and perfecty feasible).

With this, i don t mean that all more orthodox opinions are wrong (propertymanager, Cmacore, Bluemoon06, JeffInCT) quite the contrary, most of those are very wise, and i agree that you MUST work your RE instruction, your expertise, your credit and your cash.
Meanwhile, if you can develop your equity in a favorable deal, the better. And i believe that arrange such deal is not solely a genius production…

I also want to thank Kksdad9 for his excellent experience, but i feel i need to say something about it:

  • I think it was a very lucky deal, one of those which occur occasionally, and thereafter we all must not be obsessed with the aim of making a similar next deal, since it can take us several years to accomplish that…
  • Although very lucky, also a very risky one!; or aren t we forgetting the omnipresent due-on-sale clause? If anyone think that a land contract or any installment sale has the same or lower risk of triggering the monster than a well-made lease-option, you can always confirm for real… then tell me the result, please?!


P.S.: Personally, i would NEVER sell a property under any installment sale asking a lower down-payment than an asked fee for an option to buy, quite the contrary. Why? Because i would be effectively alienating instead of giving the right to buy in the next future. My down payment would always be at least the double of the fee.

You guys missed the whole point. It doesn’t take money or credit to do a deal, it takes money and credit to run a real estate business. With no money or credit, you have no options when things go wrong with your deal. What could go wrong? Your buyer could back out. Your house could be on the market much longer than you thought. You could have a bunch of vacancies all at once. You could get sued. You could have a fire. You could have unexpected repair expenses. The list could go on and on. If ANY of these things happens and you don’t have a reserve of either money or credit - you’re out of business!

In addition, having money and credit allows you to do the vast majority of deals that simply can’t be done without money or credit. Having money and credit allows you to borrow 100% of the purchase price (or more) for your deals (thereby meaning a no-money down deal). Having money and credit allows you to borrow the money from a bank allowing you to save a bunch of money in fees from mortgage brokers and hard money lenders.

Your credit rating is a measure of your financial trustworthiness! Without strong credit, VERY FEW banks, hard money lenders, or individuals will loan you money. It’s just that simple.

I’m not saying that you can’t do a “deal” without money or credit. However, what I am saying is that you can NOT sustain a business without money or credit. There are thousands that try every year and almost without exception - they fail!


Boy, somone has really stirred up the bees nest here. This should have been a 3 entry post.

Jeff you are right. This should have been a 3 post thread. I just meant that you can get started with no money and no credit, but I don’t think that kdsdad9 is advising you to quit your job get a part time job, get shot at and then start investing in real estate. I mean if you want to be in the real estate business, get some money and credit. It is not the only way, but if I advised you any other way, I would not be honest.

We all have stories about how we overcame one thing or another, but the best advise is to understand your situation and improve it as much as possible.

Riot33 is right. You may not be in as bad shape as you think. If you have access to any money you may be able to use as “flash” money for a mortgage. You may not have to even touch it, just show it. If your credit score is 520 you can get “A” paper (don’t let them tell you they can’t because they can). Get a good understanding of what you really have.

I just don’t want you to be reckless or uninformed.

I think a lot of newer investors are taking things wrong. I am a newer investor, and I may not agree with every post by an experienced investor (they don’t always agree with each other), but I read them all and I understand they are trying to pass on things they have learned in the field, not in a book.

Maybe it’s just me, but I have seen a lot more “sarcastic” responses from new investors than in the past. I know you can buy some properties with no money and bad credit, but they are few and far between. My credit is bad, though I am just beginning the process of trying to improve it. I have a little bit of money to work with. I can tell you one thing, without any deals, there is no way in hell I would buy a rental as my first deal. I don’t see how anyone can advise people to do this not having some cash reserves. There are other ways to get started, such as wholesaling.

I think new investors asking for advice from experienced investors would be wise to listen to what they are saying. They have been there and done that. I think they offer great insight that we can’t learn in a book or a course.

The best advice I got in here was from property manager telling people to go look at 100 houses in your area to get a feel for market value and the types of homes in your potential farm areas. I have not been home much the last 3 months, but last week, I went out and looked at 20, and I can’t possibly put into words how important it was. I am going to look at at least another 15-20 Wednesday.

As a newer investor with bad credit and little money, I am severely limited right now. It won’t stop me from making a little bit of money, but it sure is going to make it harder. There are fewer deals you can buy. I will not buy a property to hold and rent until I have better knowledge of what it takes to manage a property, and until I have some cash reserves in case something happens. I think for me to buy a rental house now would be irresponsible and just downright crazy.

One thing I used to do was make excuses. I never wrote down my goals, or any kind of plan. I am still working on it. I have written down some things I have to do, and am working on doing them. I have found it a lot easier having some goals on paper, and also having a plan of action. Read these forums and listen to the experienced posters. I made a list of things that I had to do to accomplish my goals. It made me more accountable having them on paper, and actually gave me what I needed…a written plan of action. I found before I was sitting at my desk too much and getting over educated. There is nothing wrong with education, but in my case, I know enough to get started. I have to get out and start doing the necessary things to get started. I won’t get started sitting on my butt.

The reason I posted is because lately I have seen a lot of new investors asking for advice, and then questioning it. How can you really question advice from an experienced investor? Like I said, I won’t agree with everything they say, but as a new investor, I am not qualified to make a post and tell them they are wrong, nor will I make sarcastic posts. They are giving you free advice. Take the advice you believe and put it to use. Best of luck to everyone.

Regards, Tony

Hello All,

First of all, I would like to thank everyone for giving me advice and taking the time to answer my question. I didnt realize I would get such a response! I also didnt realize how many different answers I would get.

I first want to address the comments made by bluemoon:

“If you don’t have credit, that means that instead of sending your money to the creditors, you kept it for yourself. That means that if you don’t have credit, you must have cash. If you don’t have cash that means that it has gone to pay your creditors so you have good credit. If you don’t have either, that means that you didn’t pay your bills but didn’t save the money either.” [/b]

Bluemoon, you couldnt be more wrong. Just because someone has not so good credit, doesnt mean they spent it living lavishly. Sometimes things happen beyond our control (i.e. major medical expense, car damage, etc…) That could cause a major financial hardship, even with a good paying job. Just the same, just because someone has money, doesnt mean that they have bad credit, because they didnt pay their creditors. It is just not that cut and dry.
Where I live, 1 bedrooms are $1700 a month, there is just no way around things like that. That is just how it is in new york. Although i make decent money, unless you have a household income of six figures, you WILL struggle in New York. Thats why Im moving.

Secondly, as for the last part of your comment:

" If you have neither cash nor credit. you need to evaluate if you have what it takes to be in business at all"

Again that couldnt be more wrong. There are alot of Very wealthy and successfull people (Suzie Ormon, J.K. Rowlings, to name a few) That were very poor, had no money and very far in debt, with creditors literally knocking on there door. All they had was the burning desire to succeed. So that statement is ridiculous because business acumen has nothing to do with the fact someones credit is not so great or they dont have money put away. I think its a combination of taking risks, luck and sheer determination. These are qualities alot of people dont possess and thats why not everyone is doing this. Most people are lazy and dont want to take the time to do what it takes to be successful. Like alot of people in America, people do live paycheck to paycheck. I do agree with you on one thing though and this is what I gathered from reading everyones responses. ( by the way, bluemoon, I dont want you to take my answer the wrong way. I totally respect your answers and Im glad you are candid and forthright. I have read alot of your answers on different posts and think you give phenomenal advice. I just disagree with you on those statements)

 While you can make SOME money in real estate investing with bad credit and little money, I realize you cannot run a business in REI like that.  All I want to do in the very beginning is to do a couple of deals (weather through bird-dogging, wholesaling, or maybe finding a seasoned investor at the REIC that I plan on joining who would take me under his wing and guide me through the first couple of deals.)  so that I can have some cash reserves  behind me and in that time my credit will have greatly improved, so then I could have good credit and have money behind me.  Thats all I want to do.

Are my statements wrong? Id love some feedback. Thanks again to everybody for answering.


It seems everybody is taking everything to extremes.

I believe that in general (not everybody, maybe not you). No cash and no credit are indicative of poor management. In my business experience, good managers have both(unless extraordinary circumstances have come into play), wether it is just managing your own finances or in business. Lack of good management skills is something that can be overcome with learning and planning. Again, just a generallity, meaning that it is true for MOST people. You may not fit this.

Also a generallity, Deals are easier for people with cash and/or credit. It can be done without either, but you have less room to err on the very first deal.( possibly much less ).

Bluemoon said-
" If you have neither cash nor credit. you need to evaluate if you have what it takes to be in business at all "

don’t take this as a judgement on your ability and/or situation. Refer to my first point. Most peole with no cash and credit are there for a reason and starting a new business where lots more money can be lost is not a good idea. It is a generality and you should take a good hard look at it to see if it fits you or not. Only you can decide if you have what it takes or if you would only be looking at a deeper hole.



You are not wrong; I just need to be a little clearer. I am not saying that where you start from is where you will always be. I will say that this is a business that works on using other people’s money. These people will want you to bring a decent credit score to the game. You can get there from here. But I also mean it when I say you need to figure out if you are the kind of person that needs to be doing this business. A bad luck bobble is a lot different than bad credit.

Donald Trump has had businesses file bankruptcy. He has been almost a billion dollars in personal debt. Banks were still lining up to loan him money. Why? Because he didn’t pay the bills, but he had the cash (collateral) to show for it. You see the difference. He may not have had credit, but at that same time, he had cash. If you go into a bank with a 200 credit score, the bank does not turn you down for a loan. What they do is ask for 50% down payment. I am just interpreting what they are saying. You have to have either credit or cash. The guy I am warning is the one that when you look at his credit report, it is red from cradle to grave. He has developed a habit of behavior that can be dangerous in this business.

By the way, if you are not paying your bills, you ARE spending the creditor’s money on other things. These things may be rent of food, but to the creditor it could be caviar sandwiches for breakfast, you are not paying him. I had credit problems in my early life. I called the creditors to tell them my “sob story” which was real to me and beyond my control. The guy told me that the company did not sign up to be my partner, they were my lender. That meant that I needed to find a way to pay them.

But my advice is to fix your credit and get some cash. My advice is not that it is ok to have no cash and no credit. You are not a bad guy for not having either, but the bank won’t know that.

Good point bluemoon. It is taken to heart. I agree with you. As far as having what it takes, there is no doubt in my mind I do, just that its getting started that is going (and always will be) the toughest. All I need is direction. The desire and determination and will, is there.