Believe it or not, when I first got started in real estate I only needed $1,000. You don't need much more than that even today. And yes, I was able to turn that $1,000 into millions in just several years. Try getting that kind of return in the stock market or in just about any other investment!
Getting Started In Real Estate Investing
It's a common misconception that you need to have money to make money. Or you need tens of thousands of dollars to invest in real estate. That would be nice. And if you have it great! But if you don't that's fine too. Keep in mind, our goal is to generate cash flow quickly. So you don't need a lot of money to get started. Do you have $1? Seriously, that's all you may need.
In other cases, you may need more than just a dollar. If you have a home, credit cards, banking relationships – you have access to money. If you were to buy a car, where would you go to get financing? If you were to fix up your house and you need financing where would you go?
Sometimes we make this much more complicated than it really is. Home equity lines of credit, 2nd and 3rd mortgages and advances on credit cards are some of the more common methods to get access to start-up capital. May be not the first choice, but definitely viable options.
Need Financing – Forget Traditional Banks!
Don't rely on the bank. Remember, we're looking for run-down, distressed properties and most banks won't even touch these types of properties. That's fine.
In many cases, you can use seller financing. This is a favorite strategy of mine in which I put down just 10% or less of the purchase price and seller would hold the financing.
You can also use land contracts, assignments, wrap-around contracts and many other strategies that don't require you to come up with ALL the money to purchase a property. The key is to understand the circumstances of the seller as well as the market and apply the financing strategy that best fits the deal.
In the meantime, you're looking for financing, right? No problem. Even though traditional banks may not be lending as much anymore, there are plenty of hard money lenders who are looking to fund deals. Just check with your local Real Estate Investment Association for a listing or google “hard money lenders” for a list.
In just about all markets – even smaller markets – there are plenty of private lenders available who are looking to get a return on their money. Doctors and lawyers are some of the best sources for private money right now. Offer them a percentage of the profits and show them how you can generate a 20% or 30% return on their investment in a short period of time. They can't get that same return anywhere else right now!
Need Financing – Build Relationships!
Another terrific way to find capital is to go to your local real estate investment club or association meetings and ask other investors who finances their deals. Find out who the title companies are using to finance their deals. Call the phone numbers on the “bandit signs” on the street corners that advertise “”We Buy Houses”. Ask them who they use to finance their deals.
There's a ton of cash out there right now. Most of the foreclosures in our area in Florida, for example, are being bought by cash buyers. So there are many people who have the funds available, it's simply a matter of finding them.
A great place to find those buyers is in the courthouse records. By law, buyers of foreclosures must be listed in the public records kept on file in the county or city courthouse. Since many of them are cash buyers, they may be willing to finance your deals – especially if they don't have to do any work.
Show Me The Money!
Here are some of the best sources of funding we're finding right now that are perfect for investors who are just starting out:
—–> Hard money lenders
—–> Home equity loans or lines of credit
—–> Private money lenders
—–> 401(k) plans
—–> Credit cards