One of the most common excuses investors make is not having enough money. Instead of going out and finding money, they complain about their lack of funds. While excess capital is nice, it is far from a necessity. Many investors get their start without money. What they find is that this allows them to meet more people and develop more contacts. In the end, not having money turns out to be the best thing that happened to their business. It may be difficult to see that if you are just getting started, but a lack of funds is no excuse to not invest in real estate.
If you don’t have money, you should focus more on finding deals. By having access to deals, you can find someone to buy them. Your goal at this stage in your career should be to build your business up. Since you don’t have cash to buy deals yourself, you are not in a position of strength. This means you need to find deals and earn a flat fee or a small percentage of the profits. There will not be six figure rehab profits in this method. You most likely will not see many five figure deals come your way either, but you are generating money in real estate and – more importantly – building your network. This is more important than closing one deal and then waiting six months for your next one.
To find deals you need to find sellers. Since you are on a budget, you need to think of ways to market without spending much money. Start by calling for sale ads you see on Craigslist, Zillow and other real estate websites. Every ten calls you make you may end up with one or two homeowners who may be interested in selling. You should also contact any for-sale-by-owner signs or ads that you see. The name of the game with finding deals is to get as many leads as possible. At this stage, the business is a numbers game. You need to put the time in and find deals. Once you find deals, you can find buyers.
Finding buyers is not as difficult as you may think. This stage is easier if you have deals, but even if you don’t, it shouldn’t stop you. You probably know many people who are interested in real estate that are looking for a way in. Between your friends, family and co-workers alone, you most likely have an investor in the group. Talking about business and finances can be a difficult topic to discuss, but it doesn’t have to be. Start by having an idea in place of how you are going to find deals. Here is where you can validate yourself by having a deal ready to go. Without money, you need to have a plan for generating leads. The more detailed your plan is, the more likely you will find the money you need. If you are serious about the business, you need to reach out to your closest contacts and see if anyone has an interest in real estate investing. The odds are that someone will.
Start by sending your contacts an email stating your real estate intentions. If you send this to 50 people, you should get at least five interested replies. Many investors are scared or embarrassed to discuss the business at this point because they have not closed any deals. Every successful investor had to get their start somewhere. All it takes is a couple of deals to go from not having cash to having a network and money for a down payment of your own. You need to take the step and reach out to the people closest to you.
Another way to find buyers is to promote yourself on social networks. One post stating that you are looking for an investor partner will surely elicit a few responses. In addition to tapping into your personal network, you can generate local contacts. There are many local networking clubs and groups that are free to join. Even if you can’t find buyers you will meet people that will help grow your business. You can also find local real estate investment clubs. These meetings will often have dozens of investors who are constantly looking for deals. Find out what deals they have interest in and what area investors may be looking for. You can also network with fellow investors who may have been in the exact same situation as you. Listen to the advice they give and see what works for you in your market.
In most markets, you should be able to find private money lenders. These are lenders who do not follow traditional lending guidelines in lending out money. Between your realtor, attorney and local network, you can surely find someone in your area. They will lend based on the deal, so you need to have a deal or a business plan in place.