Little to No Money? You Can Start a Real Estate Business Anyway

Posted on February 27, 2015 by

Does this sound like you?

I just don’t have enough money to…
     go to a seminar and increase my real estate education.

I just don’t have enough money to…
     put a house under contract.

I just don’t have enough money to…
     fix up a house.

If this sounds like you, then we need to work on attitude! Thinking this way is self-defeating and will not lead to success. The reality is, you find a great deal, you can find the money. If the deal is a good deal, then the money will come with some creativity on your part. If the deal is average, no one will give you money unless you know how to market. The last choice is, of course, a bad deal, and no one will give money on these deals unless you are a super sales person and the stars line up properly, and even then, it will happen a only few times in your career.

With these things in mind, I am offering you some great places to get credit and cash so that YOU can find the money that you didn’t think you had. It IS out there. Understand that if your credit is poor to really bad, some of these techniques will not work. If you have assets, finding is much easier, but even with bad credit, you CAN find the financing. You’ll just have to work a bit harder.

Cash & Savings

Let’s start with your own cash, your savings. Understand that the total amount of money that you really need to do the deal can only be determined by a true professional who has been down the real estate buying road. It is worth it to pay a consultant $1,000 to make sure the deal is a deal.

I cannot tell you how many times I have bought a house that was 80% completed. The Seller thought they should be able to get a good price, but the houses sat and sat because they were not finished. Had these sellers had a solid plan, they could have made more money.

Where Can You Get Money

Part 1: You Have Credit and a Good Credit Score

Credit Cards: This is what most people use to get started in business. Plan on using this money to buy marketing and business education. Spending money on office space or supplies is not a good use of the money until you have customers, so invest in these two things to build a firm foundation.

Bank Loan Like SBA: This is an excellent way to start but only if you have credit. There will be monthly payments. You will need a plan and lots of paperwork. If there is a default, the Government-backed loan will take your Social Security income to pay off the debt.

HUD Rehab Loan 203B or 203K: This is a great opportunity for a person who is good at paperwork. It will get you a loan which will give fix up money to the project. Don’t expect to get all the money. You must be able to get contractor bids and put together a package showing where the money will be spent, how it will be spent, and how it will be paid back.

Community Money: Atlanta has different areas which they want to get back on the tax roll. There are programs which will provide funding if you bring the plan and show you have the talent and ability to perform. Gwinnett is one place with this deal. This technique applies to commercial and residential areas. Be sure to bring your paperwork for these grants.

Grant Money: This technique takes time and effort. The good news is you will have a solid plan to get started. There are various groups who will support your project. There are professional grant writers out there, but make sure to pay them on performance rather than up front. Choose them based on their experience. Grant money is not for investing; it is for rehab and staff.

Credit Union Loan/ Signature Loan: In this case, you must have credit. Understand that if you have credit, you can still use the techniques below in Part 2. The individuals who have credit have more opportunities available to them than the individuals who do not.

Debit Financing: This financing happens when the borrower has an asset and wants to borrow against the asset. This creates a debit / mortgage on the asset. There are typically monthly payments. This is the typical method for buying houses for people who are not creative.

Equity Financing: This is a little bit different from Debit Financing because you are selling a portion of the company or assets for future benefit. These earnings are for cash. You would sell stock or part of the revenue, and there are typically no monthly payments. If the business doesn’t make a profit and collapses, then the loan might not have to be repaid. Typically, the investor wants to see 2-3 years of tax returns, assets, and revenue.

Don’t give up if you don’t have credit. You just have to be a little more creative and build better networks. More importantly, successful people who turn around the financial situation do so because they do what they say they are going do, no excuses. People to whom investors give money are typically focused on paying people back in a timely manner.

Part 2: No Credit and No Hope in the Near Future to Turn it Around

Crowd Funding: This is the wave of the future and, I believe, will put banks out of business. In this case, you will submit a plan and show how you will be able to pay back the loan. Go to to get more information. They are loaning all over the metro Atlanta area right now and will loan on second mortgages. They will also loan on property that needs a significant amount of work.

Private Placement of Stock: This solid technique does take a lot of paperwork, and you must know what to say in your presentation. When you are selling stock, you must have an LLC or entity which sells stock in place. It helps to have few assets in that entity. You can sell interests in your company to raise capital.

Selling Account Receivables: This is a technique which helps many small business owners operate when they have a cash flow crunch. When selling the accounts receivable, one needs to expect a discount on the face value of the asset. The other thing to consider is to sell rents or a pay day loan. I don’t suggest this type of financing unless you know that you will be able to pay this back. This can be a slippery slope method of getting cash.

Owner Financing: This technique is the easiest way to get low cost, easy financing. Start with friends and family. All you have to do is ask. There are many sellers who want cash in the beginning, and once you find out their motivation, you can persuade them to take payments or allow you to take over their payments. There are other methods such as contract for deed, wrap around, and lease option.  

Private Money from IRA’s: This is private money financing at its best. You will use your funds from an IRA as debit financing on a property and then pay it back. For this to qualify, the lender must have the funds in a self-directed IRA account. There is a good bit of paperwork, so this doesn’t typically happen quickly. This is a great opportunity and a great way to get money. If you can demonstrate how to pay someone back by showing them your plan and the numbers, then chances of this coming together are high.

Sweat Equity: For this method you will put in your hard work and sweat in order to finance part of the down payment or the monthly payment. This typically happens best with a run-down property which needs repair. The seller must be willing to trust your abilities to make the necessary repairs and make them in a timely manner.

Subject To: This method is to ask the seller if you can make the payments on their behalf. You take over their payments to the bank. Understand that in this case you will need some protection so that once the payments are made, you receive an interest in the property. There are risks, so protect yourself from lawsuits.

Sell Your Stuff!: I have coached people who are so attached to their stuff that they cannot see that once the clutter is gone, they have cash to invest. For example, that old junker in the yard might sell for $400 and provide the seed capital to work with realtors or use as earnest money.

Or sell some of the collectables in the house: we all have things that we don’t need. When we monetize this object, we open the opportunity to get cash to play the real estate game. Some examples are coin collections, Barbies, American Doll Collections, baseball cards, athletic gear, and boats.

Or you might pawn the things you have not used in a long time. You might have golf clubs, jewelry, and antiques. These are all things that can be changed into cash for you to get an education, use as a down payment, or use as earnest money. Understand you will not be going back to the pawn shop to retrieve the goods; they are gone. Don’t get tied up in the pawn and title pawn trap.

Partnership with Someone Experienced: We all bring something to the table. Which strengths do you have? What are the contributions you can make to a team to make it streamlined and profitable? Computer skills, time, salesmanship, accounting, and design are just a few skills that you might have. You might bring knowledge, labor, or sales experience. You bring your talents, and if you can perform, then the other person will bring the money. Note: Always have a performance clause in your partnership agreement.

The great news about real estate is that YOU can overcome adversity in the market. I enjoy working with investors who are positive and motivated enough to do this, to face challenges and overcome them creatively. The true entrepreneur will overcome tremendous adversity.

If you would like to know more, please come to meet me at the meetings or give me call.

Russ HinerRuss Hiner is an active real estate investor, coach and mentor. Russ is currently the leader of the Atlanta REIA Creative Deal Structuring Group and co-leader of the Atlanta REIA Mastermind Group. Russ also teaches several Atlanta REIA Workshops throughout the year on a variety of real estate investing topics such as Negotiations, Wholesaling 101, Wholesaling 401, Real Estate 101, Property Management and more.

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