One of the things that is keeping me from moving forward are working funds. Does anyone know of a way to get “start-up” money to get this business off the ground? Mailing costs, obtaining a new address cost $120 for 6 months, etc. For me to start wholesaling to obtain cash, some start up funds would be great. Any suggestions are appreciated. Thank you.
That’s a common question.
Either borrow the money on credit cards, or from grandma, or get a $5K personal bank loan …or get a job and start scrimping.
Frankly, I think the job/scrimp method is the wisest approach.
Why? Because without actionable training and direction, you can blow through five grand in three months, and have nothing to show for it, except experience on how to blow five grand.
The job/scrimp method will force you think smarter as you move forward.
Meantime, you can still move forward without much money, but you’ll need to rely on the ‘no money’ guerrilla-style prospecting tools, which include your phone, computer, and a car.
This of course, means you’re calling, emailing, and otherwise prospecting for deals in the classified ads, both offline and online, while you’re assembling more marketing/investing capital.
Assuming you find a deal using the guerrilla method, you tie up the property, find a buyer, and flip it. Hopefully you make some money.
If so, you plow those profits back into your investing nest-egg, and continue prospecting the low-budget way.
After your first couple of profitable deals, you’ll have some money saved, and better understand what’s necessary in this business, and begin looking for higher-quality, actionable training.
That training will help you make finer, more-profitable distinctions in your prospecting, analysis, negotiations, and your resale profits.
It will help you know exactly where to invest that five grand; where it will do the most good; produce the best results; and allow you to scale those results.
When you’re netting $30,000/mo, I want a rib dinner out of you, from the Claim Jumper. :biggrin
Thank you so much for the information. I will take your advice and when I start making $30K per month, I will definitely take you to Claim Jumper!
Perhaps a place to look is qualified money (Pension Funds, IRA’s, 401k’s, etc.) as a funding source. Although that would take some effort and coordination, this source as served me well for 25+ years of investing in real estate. I’ll give you two specific examples that I personally did over the years and if I were in need of money would do again today.
Example #1: Made an offer on 12 single wide mobile homes with attached lots, all in one subdivision in a rural area west of Atlanta for $12,000/unit. Agreed on a handshake with closings within 60 days. Next, I began to advertise ‘owner financing, no credit required’ at $21,000.00/unit with $2k down (I took anything for down payment including jewelry, old car, cash, whatever they had of value or a promissory note). Financed 120 months at 12% interest, $19,000 1st mortgage, with a payment of $272.59. Then I began marketing to everyone I came in contact with by saying, “How much of your retirement is earning UNDER 18% interest.” The answer was always ALL OF IT! I pre-sold the 10 notes to pensions and IRAs at a discount to yield 18%, which was $15,128.59 in exchange of making the mortgage payable to that pension/ira trust. Had the funds sent to attorney and closed all 10 deals, walking away with $3,128.59 minus some legal fees for each closing and netting nearly $30k on this effort. All I had invested was some time, education, and lots of effort. These simultaneous closings, all 10 of them were funded and sold. This, or some similar fashion can be used today, for the asking.
Example #2: Drove through a large mobile home park and wrote down the telephone numbers of all mobile homes with for sale by owner signs in windows. Screened many and found one that I could buy for cash at a deep discount of $3000.00. At that time, I did not have $3k loose to spend, so I gave a $50 deposit and told them I would close in 30 days with cash in exchange for their title and a cleaned empty mobile home. In the meantime, I got written approval from management that I could keep the home in the park and re-sell with owner financing to a new family who they approved to live in the park. Also, I made certain that the park did not have a lien for defaulted lot rent payments or utilities. I then advertised ‘owner finance no credit required’ at $500 down and $200/month for 5 years. My only criteria was they were to be approved to live in the park by management (my screening process back then). In the meantime, I made some calls and asked some folks ‘how much money in your retirement plan is earning under 18%?’ The answer was ‘all of it.’ I presented a note available secured by title and insurance of 60 payments of $200/month ($12,000 total payments) discounted to 18%; Secured a check for $7,876.05 from IRA funds, closed my purchase, closed my sale, assigned note, walked away with $5,376.05 in my jeans!
If I were starting out in the market today, I believe I would do the same thing to get funded…there are $7 Trillion in assets sitting in qualified plans that can be used to fund real estate deals or notes…just for the asking. If their trust document does not allow such a purchase, find one and suggest they move their funds to the new trust which will permit them to buy/fund your deals.
Hope this helps.
Rob
I appreciate you giving these examples of getting start up money how did you learn this and what was the source thanks