How to Invest in Real Estate with no Money
Today we are going to address one of the most commonly asked questions in all of real estate, “can you actually invest in real estate with no money?”
A lot of people claim you can! There are a lot of seminars and a lot of programs that say you can. Today I’m going to get to the bottom of it, and I’m going to share with you that, yes it is possible to buy real estate with no money, but I’ll even more share with you exactly how I did it.
So let’s talk about this, and how to get started. There are actually many ways of getting into real estate without money. Here, I’m going to hone in on one, and what better way than to show you the very first property that I did. Hopefully, as I share my experience and the steps I took, you’ll learn how to invest in real estate with little money, in a way that allows you to take action.
In the video above, you’ll see my first investment in real estate. The first property is very important, because first property ended up leading to my hundreds of homes that I now own nationally around the country.
The reality is, most of the real estate I buy, I don’t use any money. In fact, I don’t even use any credit.
On this very first home my strategy began with saving up $3000 over 14 months. Now, why would I refer to that as a no money strategy? Well typically in real estate if you’re going to put 20% down as a down payment. That can be $30,000, $40,000 maybe even up to $50,000 that you need, for buying a single family home below the median. $3000 compared to $40,000, I’m going to call that no money.
You could use a CREDIT CARD, you could use MOM and DAD, a FRIEND, you could BORROW IT, GET A LOAN on it, SELL SOMETHING in your garage. $3000 a very small sum of money compared to the big game of real estate.
My very first mentor told me that there’s some things that I needed for me to make this strategy work. He said I needed the following:
- 2-Year Work History
- Basic Credit Score
- Enough Time on the Job
So I patiently waited 14 months, saving up $5000 in the bank, $3000 of which I used for a down payment and $2000 as an emergency reserve in the bank. Those 14 months were not easy. I was barely sliding by, because I was making less than $25,000 a year. But 14 months later I’d established my three trade lines of credit, meaning, three credit cards that I was responsibly using and I found this house with the help of my mentor.
Now, if your going to go through all the trouble like I did, and learn how to invest in Real Estate with no money, this next part is important. If you choose the right 1st property, the next property will come a lot easier.
The First House
My FIRST HOUSE was unique. If you take a look at it, it’s got a basement apartment. This house was worth about $150,000 at the time, and I bought it for$110,000. That’s a $40,000 equity position. So the day I bought this house I was able to rent out the basement, which covered my entire mortgage, and I walked into $40,000 of equity.
I bought this property with a traditional FHA loan which even less than average credit scores can qualify for. I lived there for 12 months and even though it was my home, I considered it an investment because I bought it with that equity. 12 months later I was able to HARVEST THE EQUITY in it that I could use it to buy my second house.
The Second House
This is the SECOND HOUSE that I bought. One of the things that’s great about this house, like my first house, is it also has a mother-in-law basement apartment. I was able to rent out my basement, and have it pay for80% of my mortgage. Now, how did I buy this 2nd house? Well I got a home equity line of credit from the bank, because of that huge equity position on my first house, and used that as a down payment to buy this house.
Now my first house became my first official investment property, paying me over $500 a month of residual income while I lived in this house, and you can see it’s a significantly nicer house. Well the equity in both of these properties were leveraged to buy my third house, and my fourth house.
At this point, I learned another strategy to buy real estate with no money. Because of the experience and success I had in investing in my first four houses, I had developed a new type of asset. In addition to the financial assets I had built, I had created a relationship asset. I was able to go to others and say “Hey, look at what I have done here in real estate” and they would choose to partner with me.
My first partner was my father-in-law. In fact, when I started buying my homes I was so young; he thought I was crazy because I was a college kid. Four homes later though, he looked deeper into it and he said “You know what Kris? You’re out-performing my 401K! What if I use some of my money and we partner up?” Now I was able to buy more real estate with other people money, and we split the deal. That’s a win-win!
When I got up to about 10 properties as a senior in college and I started thinking to myself “you know what I really need?” I need more FATHER-IN-LAWS
I went and found more father-in-laws, so to speak. I found a doctor in the community that had been tracking my results. I also found an executive for a company, a couple of other individuals and I took them out to lunch. After showing them my track record, they all said “sure, we’ll put up the money, we’ll partner with you because you’ve got a track record.”
Ultimately, that’s what led to hundreds of homes. Those are my two favorite strategies for doing real estate with no money.
The Third House
This is the THIRD HOUSE that I’ve ever lived in. Those first two houses built that entire portfolio and made this possible.
Eight years ago my wife and I custom-built this10,000 square-foot house and our real estate has taken care of us to this day, basically getting into real estate with practically no money and it all came down to having a GAME PLAN.
Were the first steps I took worth it?
To you that’s reading this… I encourage you to give this strategy a try. I hope you STEAL it, I hope you COPY it, I hope you USE it. There are many other ways of doing it as well, and perhaps another strategy would be a better fit for you.
The whole point is, “Yes! You can do it.” Create a very concrete game plan and then act out that game plan. Stick to that game plan for a long time, because in the world of real estate, this isn’t something that happens overnight. This is something that you chip away at. It’s something that you work at for years, to ultimately get to that place where you have enough RESIDUAL INCOME coming in, that when you’re retired, it’s covering all of your needs.
If you’d like help creating a game plan specific to you?
We offer a free game plan consultation. I look forward to talking to you, to help you figure out your own plan of how you can invest in real estate with no money, like I did.