When I first started in 1994, I had very little money and very little credit. For all intents and purposes, I was broke. I had no credit cards and no rich relatives. I succeeded in spite of these odds. I succeeded because I had no money or credit. I now know that having money and credit when you begin your entrepreneurial career in real estate can do more harm than good, it can actually defeat you if you’re not careful. Having no money keeps you focused on doing the deals that don’t require money. Without credit, you’re not going to be applying for bank loans. Inadvertently, you have avoided the two biggest traps in the business…not because you are so smart, but because you had no choice.

Whether you have money or not, you should learn to leverage your intelligence, not your wallet. When you do that, having no money becomes a non-issue and you will find that you don’t always need it to buy real estate. If you are writing big checks, you will always be concerned about losing those big checks. You lose your focus. If you are personally guaranteeing loans, you are risking everything you own. Do neither…. and you eliminate your risk. You will stay focused on succeeding.

But don’t get me wrong, I’m not saying you shouldn’t have money. I am simply saying you will get to where you want to be much quicker if buying real estate doesn’t depend on your capital or the amount of money you can borrow. If it does, you will find yourself a slave to your limited resources and you will move at a snail’s pace.

How many loans can you get before you are cut off? Only a handful, and only if you have money for points and closing costs. How many properties can you buy if you have to write that big check each time? If you don’t have bottomless pockets, not many I assure you.

On the other hand, how much real estate can you control with loans subject to (that stay in the seller’s name but title transfers to you)  before you get cut off? NO LIMIT! And no one is counting. You never ask permission or have to fill out an application to a loan officer or mortgage broker. The loans are not on your credit and you are not personally liable.

If you are buying Junkers to rehab, how many private loans can you get before your debt to income ratio becomes an issue? All you want! You should always come away from closing with more money than you need to rehab the property. So you see, having enough money to buy a Junker isn’t a problem. The problem is finding the lender or mortgage broker to get you the money, which is very easy once you make up your mind to get it done.

Moral to the story: Stop making “no money” an excuse to fail.

Many of you are saying, “I can’t find a private lender or mortgage broker that will work with me! “ What you really mean is that none have called you and begged you to take their money off their hands! They are out there, you just have to get out there and shake the bushes.

Okay, so you’re not ready for bush-shaking! You’re still green and don’t know the ropes. How much money do you need to wholesale a house? How much money do you need to lease option a property and sub-let it to a tenant buyer? How much money do you need to control a Junker and flip it to a bargain hunter who wants to strap on his or her tools and do the repairs themselves? You guessed it… none.  Well, maybe the $100 deposit for the contract to be valid. And let me say this, if you can’t raise the $100, I suggest you don’t quit your day job. Let me give you an example of a deal we did not too long ago:

I was driving the neighborhoods that I elected to work in. I made a turn onto dead-end side street and found myself looking at a Junker that was begging for me to buy it. It was a vacant frame home on an acre of land and the roof was sagging between every rafter. The grass was 3 feet high and there was a pile of junk loaded up on the carport. I walked out behind the house to find a badly deteriorated semi-attached shed and a huge hole in the roof that was covered with a blue tarp. I wrote down the address and continued with my neighborhood drive.

When I got back to my office, I turned the information over to Debi who did the research as to owner and relative value. The owner lived in Worthington, Ohio and the property, a 2 BR/1BA built in 1967, had an estimated after repair value of $45,000.00. We sent our letter out to the owner and shortly thereafter we received a call from them. 

As it goes, the owner had inherited the home from her aunt who died a year and a half earlier. Since that time, all the owner did was pay the taxes and insurance and utility bills. They were headed in later that week with the intention of taking the things that they wanted and turning it over to a real estate agent to sell. Talk about being in the right place at the right time! They asked me what I would give them for it. I told them I would have to see the inside before I made an offer. They agreed to call me when they arrived.

And they did. I went to see the house when they called. The inside reeked of mildew from being closed up for so long. The hole in the roof in the back of the house had caused the ceiling below it to collapse. The walls were covered with a dark paneling and the carpet was a very dirty green shag. The kitchen floor was “carpeted” with those 12 x 12 glue down carpet squares, none of which were the same color! The fixtures in the bathroom were very badly stained with iron. There were dead roaches and flies and spiders everywhere.  Ironically, there was a brand new refrigerator in the kitchen.

On the spot, I made them 2 separate offers. If they would agree to finance me for 1 year, I would offer them $20,000.00 with $1,000.00 down and give a mortgage of $19,000.00 at 7.75% with a balloon payment in 12 months. If they wanted all cash, then my offer would be $14,000.00 with $100 down and the balance at closing, which I set for 45 days out. I agreed to cover all closing costs. They said they would think about it.

And they did. The night before they headed back to Ohio, they called me and accepted my cash offer. At 11:00 that night, they were in my office signing contracts and taking my $100.00 deposit. They agreed to provide me with a set of keys to the property and I agreed that I would not begin any repairs or occupy it before closing.

The very next morning, I went to property and put a FSBO sign in the front yard. Within 24 hours, a neighbor of the property called and inquired as to our asking price. I told the interested potential buyer that we were asking $29,500.00 and were not offering any terms. After a little negotiation, we agreed on $27,500.00 with $2,500.00 down and a closing within 30 days. The buyer would cover all closing costs.

To make a long story short, we had a simultaneous closing in 19 days. The buyer brought a check for $25,000.00 of which $13,900.00 was sent to our seller in Ohio and the balance of $11,100.00 came to us. Adding the down payment, we made $13,500.00 in 19 days with a mere $100.00 out of pocket. We paid no closing costs and only owned the property for about 2 minutes! I have that brand new refrigerator in my garage full of our overflow fruits, vegetables and frozen foods.

So I ask you, what is all this noise about how you can’t get started or get moving because you don’t have any money? Money is not your problem…your mindset is.

Since I don’t know you personally, I don’t know what is specifically stopping you. I have a hunch though. Fear, plain and simple. Fear based in ignorance. I’m not being mean when I say you are ignorant, I’m just saying you lack the education and information necessary to lose the fear.