Watch Out: A beginner with No Money

Hello, I have no money. However, I am not in debt at all, but still, I do not have thousands of dollars for getting started with real estate. I do have my real estate license, but zero experience using it, and again, no money. I am self-employed and make money from landscaping, mostly pulling weeds, but I am not generating enough money from it.

I attend lots of real estate investor club meetings but I am the lowest person on the totem pole, and I am not finding the right people to work with I guess. It seems like an older group of folks who already know each other and they do not much care to mentor newbies to the extend I think this requires for me. I ask for mentorship, I plug my landscaping work, and I ask to work for them to see what it is like being an investor and shadow them, and so far nothing, just a few small nibbles. I am not giving up yet. There are a couple experienced people in the area who do mentorship programs for a minimal fee, like $100 per month, and still I cannot afford that yet.

Something has to give eventually. It seems like I am the only one at the investor clubs who started with no money. Everyone else seems to have eased into it effortlessly, as if, somebody gave them the funds to get started, or, they knew somebody who just gave them a leg up and brought them into a team of people who helped them along. Like they were brought in under the wing of an experience person and protected. I do not seem to have that same thing going on yet. Sure I am not the brightest person in the world but I have done a lot of reading books and attended lots of lectures, and I have the foundation down for my real estate investor career path, but, I have no money to invest.

I have networked with lots of people but they are not exactly opening up the doors for me to be in their winners circle. A year ago I managed to save up to $1000 and blew it all on trying to wholesale. I had signs and did everything I should have for wholesaling, but I was not successful with it yet. It took a ton of work to save that amount of money to try wholesaling. Should I do it again, save up a grand, and then repeat trying to wholesale when that did not work the first time?

I figured that if I just get a minimum wage style corporate job that I can just work enough to generate some incentive for a bank to give me a loan for starting, or for a private investor to give me a loan, but I have applied for so many corporate jobs, for so many years now, that I give up trying to get a normal job. Honestly when you work for only $10 per hour, what private investor or bank would give me a loan for a home? I have spent a phenomenal portion of time apply for employment and interviewing at places I really do not want to work at anyways. They are not hiring me. All I want to do is be in real estate and make big deals.

It’s like I need some significant capital to get the ball rolling, and all the experience investors never want to say or admit how on earth they acquired enough money to purchase their first deal. I suppose they just grew up during a different era when real estate investing was easier to get started with. Or their parents gave them their first house and put them on the housing ladder for free. I have never owned a home yet. Any valuable direction would be appreciated.

I am All Ears

All Ears,

You have covered most of the normal issues that beginners with no money or experience face. You’re not unusual, or unique in this regard.

You’ll get lots of advice, but one thing that will get you the furthest and fastest is NOT attempting to make this work with NO money.

You need five thousand dollars to get into this business. It takes that much practically to start a lawn business, after you buy a truck, equipment, and tools.

Somehow find five thousand dollars. Or figure out where you can borrow it. Qualify for credit cards with cash advances. Open accounts and begin depositing money into two or three credit unions. Ask to borrow small amounts, secured by your deposits, to build up your credit with them. Find out what they require and work to meet those requirements, of course.

Meantime, borrow and pay back larger and larger amounts of money. Keep putting money in the bank and borrowing against it, but more importantly, pay if off after you have two or three on-time payments recorded against your credit. This should only cost you interest. YOU ARE NEVER SPENDING THE MONEY YOU BORROW.

If you continue doing this it won’t be very long until you’re able to borrow fifteen or twenty thousand on your signature, even if your income remains relatively small. You would be borrowing more against YOUR character, than your income. Just saying. This means establishing a relationship with the banker, too, not just the bank.

Of course, there are faster ways to come up with five thousand. Hit grandma up. If she won’t budge, check her will and see if you’re in it. If you are, kill her and make it look like an accident. And cha-ching! Be sure to offer to help with the funeral costs, you know, just to throw everyone off the scent.

Once you’ve got the money, learn how to present yourself as a reliable, trustworthy person, and don’t be afraid to say it about yourself. Get proof. Get testimonials from your friends and those who used to hate you, but now love you because you’re different since Grandma’s unfortunate accident with that axe in her forehead; after those prison years; and giving up drinking; and the prostitution thing you had going on.

Learn how to sell yourself. Be confident.

Learn to disqualify sellers that have options, and sift down to the exhausted, out-of-option, and flexible sellers who need you to buy their house yesterday and they don’t care how much they get, or how you promise to relieve them of their issue. Listen for problems. Offer to solve problems. Give the seller what he wants, and you take everything else.

Learn how to borrow money from sellers. Don’t be shy about asking for what you need, while trying to give the seller what he wants. Everything’s a trade-off.

And finally, always care less. “He who cares least, wins.” If you do just that, it will help you walk away from a lot of chucklehead sellers that are not motivated, want to argue, eager to say “no,” and just pull your string …and keep you from winning, among other things.

Go find five thousand dollars, and you’ll soon begin to figure out exactly where to spend it, to get started and going strong in real estate.


What javipa said is spot on. You have an advantage over some college educated guy with a six figure income. Why you ask? Because you have motivation. If a person can’t make six figures just by going to pick up his paycheck every 2 weeks he has little motivation. I have a lot of faith in you.

I don’t know where the poster comes up with $5,000 but I agree and disagree with him at the same time.
If you are talking about money needed over and above supporting yourself and covering your living expenses, then I say you can get started with $100 and time, and some basic knowledge. But it isn’t just the $100, you need to learn two things, learn how to start conversations with anyone and everyone, and become an action taker, it;s mindset and you do it, or you don’t, which means you succeed, or you don’t, the choice is yours. So step one learn how to smile and say Hi, how is your day going?, Or a dozen other things.

You say you blew a $1,000 before, what exactly did you do with it?


Five thousand dollars isn’t a magic number, but it is a number that eliminates the need for hunting “no money” unicorn deals. You know the deals that don’t require any money up front. No marketing money; no money to tie up deals; and no money to close. They’re out there, I’m sure. It’s been a while since I’ve found one, and I’m usually the first one to do it.

Meantime, without the five thousand, you have to put the BS motor into over-drive; constantly blow smoke; and otherwise negotiate from your heels. For some this comes natural. OK, then.

Meantime, dreamers and half-wits believe in hundred-dollar, or “no money” real estate investing.

No down? Absolutely.
No credit? You bet.

No money? Sure, I have some rare, pink, invisible Rhinos in the back forty, that are worth $40,000 retail each, that I’ll dump for $2,000 a horn. Such a deal! And I’ll finance any of them at zero interest, 100 bucks down, 100 bucks a week, possession at pay-off, with no qualifying.

Look, at a certain level, money is a mindset, not an amount. But it’s not practical to believe that 100 bucks is all that’s necessary to make it in this business.

Already 50% of investor wannabees quit after finding out that real estate investing actually requires work. Then you add in the “no money” unicorn herders, and that’s probably another 25%.

And then you have the ones that discover Bandit signs take up their Fridays and cost money; hate making offers; hate people generally; and just for giggles, perpetually chase easier, cheaper, and less time-consuming ways to find deals.

Maybe that leaves about 2% who actually make it past all the BS, short-cuts, and unmotivated sellers. That’s a terrible gamble.

If you want to win, you need to be prepared to win. I’ll put my bet on the guy that learns how to win by first scraping $5,000 together, over the guy hunting for unicorns with a hundred dollar bill.

Hi your responses are tremendously helpful. Very cool to be at this forum.

In response, I am a very outgoing person and I am comfortable communicating with just about anyone. I am still building real estate muscles. Actually, door knocking at random houses still intimidates me but I am willing to continue working at it until I am solid. Definately.

What did I spend my $1000 of funds on? Gas was the biggest expense. I did a lot of driving for dollars. Second was probably stamps. I mailed between 100-200 yellow letters out. Then I had car magnets done up, and I printed lots of stuff for mailing post cards, fliers, cards. There was a PO Box paid for.

Getting hungry? Buy lunch. Need more gas? Fill it up. Meet up with other investors? More gas. Making phone calls? Buy another phone card for minutes. It all added up.

I enjoyed trying to get wholesale deals thoroughly but wait… I did not yet make any moolah from my efforts.

Oh then I blew the rest of the money on real estate school. That was a big expense too because it was two weeks of doing nothing but classes, lunch, classes, studying, dinner, all the while I had to completely place my landscaping work on hold. Thus I had no cash flow during the time I was getting my real estate license. So I crawled out of my exam booth with a real estate license but I was also broke as a joke.

Its not a complaint. Its just a grind. With more fluency I will be able to be more creative but this was my first shot at wholesaling and I was clumsy compared to others who have more experience. Thats fine.

Oh, did I mention bandit signs? You had better believe that I was working on that also however my signs were homemade because my funds were so short I did not order fancy signs. So that was time consuming making my own signs but it was worth the experience points. The bandit sign thing is wild stuff. There was a lot of competitor bandits.

Then I was printing out contracts for wholesaling. It took time figuring it out how to make legit contracts on my own. I was also building a buyers list on my own without a REIA group assisting me. So it came down to putting out bandit signs (homemade again) advertising fake homes for sale, and that did get my phone ringing. I spent time with posting Craigslist ads, and responding to various ads. I spent time placing my cards and fliers at community bulletin boards. I set up a google voice and was juggling two phone numbers.

I was pulling over to call about or view FSBO houses. I made print outs to help me quickly get vague estimates for the costs of repairs. I never put in an offer on a house but I suggested making offers then things would fizzle out or I would get distracted and keep looking for other houses. Clearly its like exercising or lifting weights. Im just not going to start by benching 400 pounds, that takes practice.

It was enjoyable. I like the rhythm of persuing distressed real estate deals. I just wonder what it is going to be like to finally make money doing it…

All Ears,

That’s the most detailed account of a first attempt I’ve ever read!!!

Congratulations for just getting in there and doing the very best you knew how to do.

Here’s some issues I’m seeing from this far away, assuming you’re attempting to do wholesale flips…

My comments are not intended to be critical, but observational…

  1. Getting your real estate license makes you liable in the lawsuit where the seller decides that he sold to you too cheap, and sues for unlawful, professional advantage, and unwinds the deal (especially when dealing with the family of an elderly, bargain-giving seller). Guess who loses these lawsuits?

And you become a slave to a bunch of regulations, and limits to your creativity in dealing with sellers. I’m not saying this is a mistake. I’m just saying that most wholesalers don’t want the government interfering in how they do business. Not to mention real estate schools have little to teach you about wholesaling, negotiating for your own deals, or even what an actual deal looks like. It does give you credibility with other licensees. And to be frank, the number one wholesaler/flipper in San Diego just got his license last year …only to be able to tap deals that come from other agents who serve as bird dogs.

  1. Mailing 200 direct mail letters is practically like not doing anything at all. Never mind not doing it every month. It’s not that this won’t produce results, but that it won’t produce results done once.

I don’t want to scare you, but there are wholesalers in San Diego that regularly send a minimum of 30,000 letters and postcards every month. One flipper, closes seven to ten deals a week, using a commissioned sales and marketing team that is on the phone every day tying up deals. Basically his whole business is generating leads, tying up leads, and flipping leads. He’s got buyers for just about anything he can tie up. He has mastered all the major lead generating sources including Craigslist, bandit signs, radio, internet, bird-dogs, other wholesalers, telemarketing, and direct mail. The “secret” is continuity, not one-off attempts.

  1. Handwritten bandit signs are better for selling, and pre-printed ones are better for buying. These are excellent for branding yourself, getting your name in front of your market in real time, and where they can’t escape seeing you.

Lots of competition indicates you’re dropping hooks where the fish are biting. Don’t be afraid to put signs where others are putting their signs.

Most bandit sign operators fail to understand what a phone is for anyway, and allow the most anxious, desperate sellers go to their voice mail to rot for a day, or two. Not kidding.

So, answer the phone (or have somebody), and deal from there.

Again, there more bandit signs you get out, the more prospects will see them. And the more often you do it, the more familiar you become. And the more likely the seller will call you first. Of course, that’s another reason to make sure your bandit signs stick out and become memorable. Otherwise, that’s a lot of work to just blend in.

Have you seen this one?

A lot of this can be figured out, simply by banging your head on the wall and not quitting. Really. After a while, you sense the stud, and move your head over four inches, and viola you finally put your head through the wall! Yay.

Short of that, it’s very important to invest into some organized training …on wholesaling specifically, or several of them, as each provides a different perspective and nuggets of prosperity. This training should be something that explains the minimums of what to do, and why.

For example, any of them should tell you that direct mail is not a one-off prospect, or a campaign to be started and finished. Rather something that you put into gear and let it roll every month until you retire. Literally.

That is, until you re-sift that list, and send to an updated crop of prospects that better fit what you want to find. I mean after a while, half your list will be coming back undelivered. Then what? Meantime every one of those loser pieces cost you 50 cents.

Never mind knowing when to scale and why. For instance, you send to a small list, and note the conversion rates. Once you know that number, you can scale.

I consider 1500 mail pieces a test sample. You can get a clear and immediate sense of whether you’re on the right or wrong track with that number of prospects. You send every 30 days. Of course, that’s NOT the minimum I send, but it’s terribly difficult to create a critical mass of spirit-lifting responses from quality prospects, if/when you’re not sending at least 1500 pieces every thirty days to a likely responsive list.

Oh, and don’t for a second believe that nobody else is doing the same thing. It’s just that most don’t understand direct mail. They treat it as a campaign, send 200 pieces, and stop after one, or two mailings. And when their response rates sucks, and fail to convert at all, they figure real estate investing isn’t for them. Hopefully all your competition falls into that category…

Meanwhile, your competition is coming and going, but you know who notices YOU? The seller that keeps seeing the same letter/card from the same person every month. Of course, you’ll be remembered, even if that prospect was only 1 of 200 people that got a card from you. Anyway… ramp up, don’t stop, and invest in some organized training, so you can find the studs faster, as it were.

The bottom line from my perspective was that you were doing too little, and doing it too infrequently to generate a critical mass of conversions.

Create a tailored list of highly sifted prospects that fit the profile of houses you want to buy, and test the list. Once you have a conversion, you’ll know how many cards you need to send a month, whom to send them to, and how much it will cost. Then you can decide how and when to scale up, as you can afford to, and treat it like normal business overhead, and not something you save up for once, blow, and then try something else. Just saying.

Great post.

I am going to apply a lot of the info you provided. Thank you for typing the comments.

There are a lot of investors that were in disbelief after hearing my story about how I tried wholesaling and did not bag any deals yet. Maybe they just never did it themselves? Something does not add up with that because other investors admit that wholesaling is not easy. It requires effort. Its strange how many of the online guidebooks for wholesaling include lots of pollyannaism, you know, excessive and blind optimism. Some people probably do get the ball rolling easier then I have but that is not the case for everybody. The reality is that wholesaling takes time to learn the ropes, and forge the right connections, and it takes money to sustain yourself while going for it.

It reminds me of the MacGyver TV show. All MacGyver would need to get a wholesale deal is three toothpicks, a stick of bubblegum, two pieces of wire, and a box of Jello. Unfortunately I am not MacGyver. I need to purchase all kinds of resources and spend adequate time getting all my ducks in a row.

For everything you must have a plan.

People who fail to plan, have planned to fail.
-George Hewell

If the guidebook sellers ever said, “Wholesaling takes work, and costs money,” they wouldn’t sell very many guidebooks. Worse, there are freebie seekers who will only seek after free help, on how to do this business for free, and then can’t figure out why nothing happens for them.

Besides whatever else I’ve said about your initial working capital, the two basic reasons I suggest having five thousand dollars ready before you start in this business is that I spent more than that getting my business off the ground. Of course, I’m a fumbling retard with a slow brain metabolism, and a long learning curve, so anybody should be able to start cheaper and faster than I did. Just saying.

Second, the most successful wholesaler I know won’t agree to help guide anyone who doesn’t first have five thousand available for marketing. Why? Because his business starts and ends with marketing. And so does everybody else’s.

Love your posts and feedback.

You got some good feedback already, so let me address the last issue.

I’ve investigated how people started in this and other businesses through the years. To some, it’s quite private, so you can understand the reluctance to talk.

I’ve heard and read about some immigrants resort to extreme scrimping when they arrive here. I read a post a few years back where someone who worked in a donut shop, got the owners permission to sleep in the back of the store at night. It was said he did that for two years, and saved $90,000 to buy the donut shop.

I would’ve doubted the story except recently, I saw a for rent sign for a store in the neighborhood, a hand written sign that read “Store for rent (no sleeping or cooking permitted)”. In fact, my dad had a retail business, converted two rooms behind it into an apartment. He never bought himself a car, was able to put away enough to buy the commercial building the business was in. In 1963, he bought the building for $25,000 and assumed a $10,000 mortgage which was paid off in 1980. Two years ago, when my mom passed away, it was sold for $1.1 million.

Then about 3 years ago, local papers reported the disappearance of a Chinese food delivery man. They reported rumors he owed loan sharks $35,000, and was probably kidnapped. He arrived in this country 2 years before and speak no English. Fortunately he was found 2 days later, stuck in a broken public housing elevator. When found, he was asked about money he owed the loan sharks. His reply “oh no, I paid it a while back”. Undoubtedly, he slept in the back of some Chinese takeout.

When I was about 10 years old, I got to know a Jewish guy who drove around in a truck selling laundry and restaurant supplies, coming to my dad’s place every few weeks. I asked him why he didn’t get an office job. He replied when he graduated high school in the 1930’s Jewish boys can’t get an office job in major firms. And if parents can afford college, Jewish boys become doctors and lawyers, where they can go solo hang a shingle and go into practice. And I wondered why there are so many Jewish lawyers in NYC where I live.

Then about 20 years ago, my wife and I ran into another professional couple at a Xmas party. They were talking about real estate investing and putting some big money in. We were struggling and wondered how they did it. They explained they lived way below their means, and scrimped.

What did we do? We copied what they did, sold the bi-level house we had, both of our cars, moved back to NY, and bought a 3 family house that we lived rent free in one of the units, collecting two rents, rode public transit. Within three years, we partnered with my mother-in-law, bought another 3 family, bought a SFH by ourselves, and then paid all cash for a new car. I recall the dealer talking car loan, me shaking my head, and said “we’ll be paying all cash”. Felt so good to say that.

Bottom line, I see immigrants with no English having wads of cash after 2 years, guys that started their own truck routes doing well, and started investing in real estate. A Chinese real estate investor bought a 6-plex down the street from me spoke poor English, but put $750M down on the property then selling at $1.1 million. That was about 10 years ago. Asked him how he started in real estate. He told me he started a contracting business putting in new store fronts, constructing store interiors. Asked him what happens when things get slow at the contracting business. Says he keeps his crews busy rehabbing over a dozen rental properties he owns. His secret is paying off any mortgages in four to five years, then the free and clear properties would throw off cash flow for future acquisition. Says what he owes on the 6-plex will be paid off in fours years.

Looks like you have a real estate license, a landscaping business you can build on. Real estate courses are nice, but the problem is knowing when and where to apply it, and whether you have the personality. My take is, concentrate on what you can do right now, get enough cash to get the ball rolling on real estate. With wads of cash, you don’t need personality or even English.

Hi Jay,

That is an interesting concept that you suggest with opening credit cards and sending cash advances into credit unions and then moving the money from credit unions into a bank and then moving the money from the bank to pay off the credit cards… but is this stuff legal? Isn’t that almost like money laundering? How would anybody keep track of that money for reporting taxes? Are there any detailed write ups for how to implement this concept that also includes any potential pit falls?

It is a really interesting concept that I am beginning to research into and looking to open a few new accounts. I started by going through my finance drawer and organizing everything first, organizing things, because I already do have a couple credit cards and a couple checking accounts already up and running…

About how having a real estate sales license can be troublesome while conducting transactions and in the investors world:
Then how come so many real estate investors also have the licenses? Also is it any different for me (?) because yes I have an active license but no it is not hanging up at a brokers office. To be perfectly honest I have my Pre-License (but not yet my Post-license coursework) and it is like I know zilch about real estate sales. I do not have a real estate mentor that really latched on and said look I am going to help you figure this out for real and get the ball rolling in the right direction.

My goal with real estate is to make some money but it is also to begin planning for my 40’s and 50’s because right now I can see that pulling weeds and doing manual labor is wearing me down. I want to dress professionally and network with people and make big deals. I like sales a lot and since real estate is such a big dollar item it interests me. Making deals and meeting people excites me. I want to learn the trade with working in both sales and investing my money back into real estate.

Selling yachts are another option but I am not a boat person never have been.

Back to this funneling money around through credit cards and credit unions:
Just looking at all these credit unions is intimidating. Where do I even begin? Then some of my online searches brings up warnings about not using cash advances for anything, but those warnings must just be from people that take out cash advertences and then USE the money for buying new sets of pearl handled nose hair tweezers. I would definitely use those cash advances as you suggested. It worries me to think is this a legit practice for generating a high line of credit and a higher “character” with the bankers? Is this something I should just walk into my bank that has a checking account and just casually mention that I want to start flowing my money in this pattern through credit unions and build up a higher line of credit out of thin air?

I am already in the motions of taking your advice here and printed out your comments, and yes I will implement some of these ideas that you graciously provided. It’s like opening a can of worms and now I have more questions because it is a technique that I have never heard of before. And thank you to everyone else for your input.

Also I have recently found out that locally there is a program for first-time home buyers that gives them first dibs on foreclosure properties and it gives first time home buyers the first 30 days advantage over investors to grab properties before anyone else. Then they also offer closing cost assistance. This put a light bulb on in my head that if I pooled my money around with your credit building technique and schmoozed with my banker and then brought a fist full of “character” credit to a first time home buyer program, then would they let me buy a house on just a trustworthy line of credit?

Even still, planning further down the road… say I get a house. Then I can rent out a couple spare bed rooms buuuut, I have no cash. There is no cash for stabilizing any rental project. No cash for fixing anything up. I’d be an investor alright. All my money (or credit in this case) would be invested in a house but I couldn’t even afford to buy a cheeseburger at the end of the day…

This is going the wrong direction.

You’re attempting to establish borrowing power on your signature with a credit union and/or a bank.

Meantime, you already have credit established, so that’s not really an issue.

The issue is, the amount you can borrow against your signature.

You can increase that simply by borrowing more and more money, from a credit union, and paying it off in a timely (accelerated) manner.

This can be done a number of ways, but the main idea is to borrow against pledged security, and then pay it off, until you can borrow on your signature, without pledging security. This means establishing a relationship with the bank. You can even tell the bank what you’re attempting to do. They understand exactly. You’re creating a positive credit history.

I don’t exactly know where to send you to get advice specifically on this topic, except that many real estate investing authors include novel ways to accelerate credit worthiness.

It’s not illegal to borrow from one source and pledge it to another source. It’s just that the last source better not be something you can’t cover. Otherwise, the whole series of credit can be upended, because you couldn’t repay.

Meantime, this is credit establishment, not creating money to spend out of thin air.

This also assumes that the eventual investment pushes off more than what you borrowed. If not, it’s not a good enough investment.

Here’s a scenario where this all works like it’s supposed to.

Forget the percentages, and just look at the concept. These are not realistic numbers.

You find a hell-hole that all fixed up is worth $150,000.

You negotiate a cash price of $50,000.

It requires $35,000 worth of repairs.

It will cost another $15,000 in carrying costs, interest charges, utilities, marketing, etc. to flip, for a total of $100,000.

It will cost you $100,000 to net $50,000 in pre-tax profits.

You need $100,000.

You show the deal to an hard money lender. He agrees to lend you $50,000 based on the ARV.

You still need $50,000.

You borrow $20,000 on your signature from one credit union.
You borrow another $20,000 on your signature from a second credit union.
You put the remaining $10,000 on your credit card.

In four months, you’ve found, financed, fixed and flipped the fixer hell-hole, but otherwise put $50,000 in profits in your pocket. This all after paying off the hard money lender, the two notes from the credit unions, and your credit cards.

Yay for you.

Now, there’s a slew of other ways this deal could have been financed, but that shows what’s possible ‘that’ way.

I’ll come back and talk about the rest of your questions, but I am making money right now, and first things first.

OK, for the rest of my post…

You are NOT telling a banker that you’re borrowing money from other sources and depositing it with their bank, in the hope that you can borrow against ‘that’ deposit (CD, or ??). The bank will want to know ALL the liabilities you have at the time they loan you money. It would be dysfunctional and unwise to share all your details with the bank. Just saying.

It’s not that it’s illegal, it just makes borrowing money impossible otherwise. Rather, simply deposit money (from whatever source) and borrow against it, without explaining where the money is coming from.

One of my mentees did the following. He borrowed from BofA, and the same day made a deposit at Wells Fargo. He did the same thing at a third bank. He had already discussed taking out a secured loan with these banks, and met their requirements, and so it was a matter of depositing the money to get the ball rolling.

After four months he paid the loans off, and created an excellent repayment record for himself. Then he went back to one of the banks, and based on his new and better credit, borrowed twice the amount he did before, but this time it was unsecured. I don’t know how far he took that, but do that with more than one bank, and you can see how powerful your borrowing ability can become.

Somebody once said that wealth can be measured by your ability to borrow.

Issue: RE license. Not necessary. Hindrance and liability if you’re negotiating for steal deals. Private parties rarely get sued for equity stripping grandma. Agents often end up in court for doing that, and always lose. Not to mention the formal and professional resistance against using any kind of creative financing in a given transaction.

Mostly it’s 3rd party interference that discourages investors from having their licenses.

That said, LOT of licensees call themselves investors. BTW, you know who doesn’t want to lend to licensees? Banks. They are notorious for defaulting on loans, and generally being credit risks. Just saying.

Issue: The fastest way for some investors to ‘get into real estate’ is to buy their first home financed with a low-down, owner-occupied, FHA backed mortgage. It’s not really cheaper monthly after adding mortgage insurance costs, but you get in cheaper and they’re easier to qualify for (mainly because of the required mortgage insurance).

Theoretically, you could buy 10 houses this way, if you were to say, finance each successive house with an owner-occupied FHA mortgage.

The best and first way I would choose to invest in real estate is to do what a commercial real estate broker taught me after I tried and failed to get conventional financing on two commercial properties back in the early 1990’s.

He showed me how to take over a seller’s loans, create a note for his equity, and get the deed in return. This is called “subject to” financing.

Since then, I have purchased many properties this way. I have yet to have my credit checked, or to put down a down payment. I have taken ownership by giving the seller a twenty dollar bill for his equity. I paid another seller zero dollars, and simply promised not to force him to pay for anything involved in the sale.

I traded deeds with another seller, by giving him a fully-rented, free and clear house in trade for his under performing 18-unit apartment building. On other deals I simply took over the seller’s loans, got the deeds, and did it all without having the seller, much less a bank, perform a cavity check on my credit, or force me to cough up a down payment.

The last house I owned, I bailed the seller out by taking over his payments, and he gave me his deed. Nobody checked my credit rating, or verified my income, and I didn’t offer the seller a down payment, and he didn’t ask. Did I mention he was motivated and anxious to get out from under his debt, and he believed that I could help him with that, without proving it?

This is called ‘subject to’ financing. It’s an enormously powerful way to invest in real estate without down payments, credit, appraisals, bank approvals, or any 3rd party interference.

Issue: Investing for a profit. You can’t invest in real estate with money that costs more than the investment pushes off. That’s why you have to invest in bargain deals, or get bargain financing.

For me, I prefer bargain financing, which I’ve described above. This allows me to continue investing, without having to sacrifice my lifestyle to cover negative cash flow, etc.

For example, I find and flip the financing on low-equity houses, by offering to take over a seller’s loan ‘subject to’, and reselling the houses with financing included. My buyers will give me 10% down and the transactions normally take less than a month to complete. I’ll spend about $7k to put the deals together start to finish, and never have my credit checked. I don’t offer sellers down payments. I don’t worry about negative cash flow. I sell the houses at a premium, because I am not qualifying the buyer, other than he has the money I want up front, or not.

Frankly, you want to learn creative ways to finance real estate, as fast and early as you can, because eventually you run out of credit and cash anyway, so why not learn the solutions now, rather than fret about it later?

One of the best creative finance authors is Robert Allen. He’s got a couple books that are both must-have books on creative financing. One is “no down for the nineties” I think and the other is called ‘no down payment formula’

I don’t think he teaches “subject to” financing specifically, but taking over loans without assuming them is a pretty good thing to learn.


Jay my credit card has $5000 credit line.

I have a second credit card and the other day I ordered a third.

Then I have three checking accounts.

Now I am working towards opening accounts with two or three credit unions…

I ordered a few books from the library about upping my credit score.

I ordered the Nothing Down book to read it fully because I only glanced through it years ago…

How does this sound?

I am getting my ducks in a row…

My credit ratings are

about 680 with Transunion (fair)

about 720 with Equifax (good)

I do not have a small business checking account.

I do track all of my income from my landscaping business using a DOME book

Also I hold on to all of the checks that clients write me

Yes, that all sounds great. Allen’s book will expand your mind like crazy.

I noticed also in the conversation you talked to FSBOs, again with no success. This is where you literally walked away from a NO MONEY DOWN goldmine. You were focused on getting a Wholesale deal and not leaving yourself open to other possibilities. I myself am doing lease- options in the Tampa Bay area of Florida and this is one of my biggest sources of deals. Most FSBO sellers are open to a lease option, and you can easily earn $5- 10,000 per deal, again with no money down.

To explain the techniques and strategies to do this would take pages, if not volumes. I highly recommend getting the lease- options interview CD series sold here in REI CLUB. That’s where I got MY lease- options education. It’s $39.95 very well spent and worth every penny of it. By the way, one of the interviewees Wendy Patton, got her start in REI using her credit cards. But she also said if she had done lease options first, and done it right, she could have saved that money.

Hope this helps


Yeah javipa also gave me a nudge in the direction of learning about subject to and lease options. Presently those techniques are a mystery to me. However I just added it onto my list of business goals to complete during October. At the very least I will begin scratching the surface.

Javipa LOL!!
I’m a newbie and I am learning a lot from these post. You are hilarious, informative, but hilarious!