So how much money does it really take to invest in real estate? Can you invest if you don’t have a lot of cash? Isn’t that a big scam? Today. I want to share with you my top tips for investing in real estate without using your own cash. So let’s do this thing. So first of all, let me tell you a quick story of a 21 year old kit this kit figured out that real estate investing was going to be his ticket to escaping a life of Slavery to a 9 to 5 job, but he had add one major problem. He had no money. He worked a dead-end job had very very little money not good credit and no experience whatsoever. But this kid did not let that stop him. In fact, he figured out a way to make it happen.
Anyway, he used a variety of different strategies to acquire more than two million dollars of real estate in the next several years including a 24 unit apartment complex purchased with almost no money out of pocket. So if you haven’t figured out yet that kid grew up some grew a nice beard and became me. Yes. That’s my story. In fact with the Than 40 units I have today and the dozens of transactions of done. I’ve hardly ever used my own money. So to give you a broad answer to the question of whether or not you can invest in real estate without using a lot of cash. The basic answer is yes.
Should You Really Go For It?
However, should you invest in real estate with no money? Well, that’s a little more difficult question for me. It’s not as much about the amount of money. I put into a deal it’s more about the kind of deal that I can get. So if you think back to the 2008 a lot of people lost their homes and their entire livelihood is because they had these loans that were little or no money down and that caused a big mess. So I don’t believe in putting myself or anybody else in a risky situation like that. That’s not what we’re talking about today instead. I want to hustle my tail off so I can find the best deal possible. So even if I put little or no money into the deal, I still have a lot of breathing room in case something bad happens.
Here’s a quick example of what I mean. Let’s say there was a house and it was worthless say $200,000 and you were to take $50,000 of your own hard-earned money and use it as a down payment. Now you have a mortgage for about $150,000.
There’s nothing wrong with that and that’s what most people do. So now on the other hand. What if I were to find that same property of $200,000, but I hustled to find that deal for only $150,000 and then I obtained a hundred fifty thousand dollar mortgage meaning I used a no or low money down strategy to buy it at that point. Both of us would have the same two hundred thousand dollar property. We both have a mortgage for $150,000, but you put $50,000 of your own. Money into that and I didn’t put any money into it. So who is really at greater risk here? I would argue that we’re actually at both the same amount of risk of something going wrong because we have the same loan amount in the property values the same.
Contemplating On How Much You Can Lose
However, you have a lot more to lose because you put $50,000 of your own money in the deal and I put nothing so if something goes wrong, you can lose $50,000 and I wouldn’t lose anything. This is why I value the idea of how good of a deal. Can I get a lot more and how much should I put down? If you want to buy a deal and put a large down payment more power to you. In fact, sometimes you can get more cash flow or get a better deal by doing such just know that it’s not the only way next understand that investing with no or low money down has nothing to do with being broke. You see if you are flat broke. You got no money and you think that some clever no or low money down strategy is going to be your way your salvation to recover from your difficult financial situation think again creative investing is about leveraging other people’s money so you can do bigger and better. Better deals, it doesn’t mean you’re broke. I mean the real estate. Irony. Is this the Richer you become the more deals you do the more advanced. You become the less you actually use your own money. In fact, most of the multimillionaires and billionaires that are doing real estate today are barely using their own money at all. In fact, they’re almost entirely using other people’s money. So creative investing is really for anyone no matter how much money you have currently in your checking account creative investing truly is a mindset game. Okay, next onto the big question.
How do you do it? How do you invest when you don’t have out of pocket cash or you don’t want to put a lot of your cash into a deal? Well for that you’ve got to change the way your mind works. Most people have a very simple yes or no response when they’re presented with a real estate purchase either. Yes, I can’t afford it or no. I can’t afford it. And for the vast majority of people sadly, they turn their brain off when they get to that no, but creative investors. They don’t say no instead. They ask the simple question.
Becoming The Person Who Can Afford It
How can I afford it? So, how do you become somebody? Who thinks creatively? Well, the good news is you probably already have what it takes. But just to find out let’s do a quick test if somebody offered to sell you a million-dollar Mansion for just a thousand bucks. Would you do it of course you would but what if you did not currently have that thousand dollars, let’s just say you had 50 bucks to your name. That was it then how would you do it knowing that you could turn around tomorrow sell that property and make almost a million dollars in profit. I would like to believe you’d probably find a way so right now, do you have any good ideas for how you get that thousand dollars to buy? I mean our property perhaps you’d borrow the money from a friend. Maybe you partner with someone who had it. Maybe you find a way to take out a thousand dollar loan now call me optimistic, but I’m guessing that you would find a way come hell or high water to make sure you got that thousand dollars so you can make the million and that is the spirit behind creative real estate investing sure you might not be getting a million dollar property 4,000 bucks. But look at the mindset.
Having The Right Mindset
How do you think about it is exactly the same once you have that mindset and that commitment to saying, how can I instead of I can’t and now you’re ready to look at the tactics for acquiring real estate with little to no money down. Now, there are a lot of tactics that you could use to invest in real estate creatively and each deal you’re presented with is going to be unique and determining what the best tactic is that you’re going to use. For example, you could partner with someone who has the funds you could house hack a property and obtain a low down payment loan from the government. You can use the equity from an existing property to fund the investment. You could raise private money. You can use a hard money lender or you could use a lease option. You can utilize seller financing you could ask the seller to carry back a second mortgage or maybe you’d use a combination of these tactics to come up with a good solution to buy property. For example, the Burr strategy which you can learn more about at BiggerPockets.com.
The point is there are a lot of tactics that a person could employ to be able to purchase property using little to no money down. There is no one-size-fits-all method to creative investing because every single deal is completely different. And each deal requires you to look at it creatively put on your creative lenses and say, how am I going to make this property work? In fact, I like to think of creative investing as a tool box when you have just one tool like a hammer. There’s not a lot you can do with it. You can pound a few Nails put a hole in the wall or defend yourself against getting mugged, but that’s about it. However, as you add more tools to your toolbox, you can take on bigger and better projects.
Maybe you’ll add a saw to your toolbox or maybe a drill or a tape measure and pretty soon you’re too. Box is full and no job becomes too difficult in the same way the more creative investing tactics you put into your mental tool box the greater chance, you’ll be able to tackle any project that comes your way for this reason. Don’t just listen to some late-night TV Guru or some YouTube guy with a beard. I’m telling you the best way to invest in real estate without using a lot of money because here’s a secret to create an investing. There is no secret one way. Instead, you just need to fill up your mental tool box and fill it with a variety of creative.
Strategies ask other investors. How do you invest using other people’s money? Listen to real estate podcasts. May I suggest the BiggerPockets podcast which you can get to on iTunes or a Bigger Pockets that calm forward slash podcast or attend real estate webinars, like the ones that I do every week on Bigger Pockets, which you can sign up for the next one at BiggerPockets.com forward slash webinar read books on Creative real estate investing, um, for example the book on investing in real estate with no and low money down which you can pick up at BiggerPockets.com.
Even with no money, you can still start taking action on what you’re learning because all the talk all the learning all the reading all the listening all that means nothing. If you don’t get out there and take action in the words of Michael Jordan.
Some people want it to happen some wish it would happen and others make it happen. What kind of person are you? Are you going to let your lack of cash stop you from achieving all of your goals? I don’t think so.