No Money Real Estate Investing - Part One
Let me be brutally honest with you, if you're living above your means or even just right at your means, then you have zero chance of ever becoming rich. Investing in real estate, or anything else for that matter, won't save you from a lifetime of debt if you don't already know how to handle money.
"But," you say, "Real estate investing rescued those people on TV. They got out of debt and were able to quit their jobs." For starters, it's impossible to believe those testimonials are real, and even if they are, people who can do it in this way are very unusual.
You can, and we believe you WILL, create massive amounts of wealth through real estate investing. Set your goals, find properties that meet those goals with plenty of good research and then hold onto them for at least five years...preferably longer. It works... look at the richest people in your city. Of those that are self-made, I bet at least 25% of them did it through real estate. We always go through the richest people in Canada and Power List for Vancouver, and this number holds up.
The secret to successful real estate investing is to learn what you're doing first, then you can make more investments as your knowledge and assets grow. If you do that, you CAN get rich off of real estate, with less money and fewer headaches than people who try to do it in other ways.
When Julie and I first started investing, we had only had $16,000. Unlike most people I knew, Julie liked to save money. After she graduated from college she continued to live as a student, that is to say, much below her means. Any extra pennies were used to pay off her student loans. Once those were paid, the extra money went to the savings. Her plan was to get her MBA without taking out more student loans.
When we met, I had a property with my Mom that we'd purchased years before, but didn't have much else. After years and years of being a student, I wanted to enjoy the money I was making. I drove a nice new financed Volkswagen and enjoyed my nights out in Victoria. I didn't spend money excessively, but I was carrying credit card debt and didn't have savings. Julie shared her visions of "retirement at 35" with me, and I got excited.
It didn't happen overnight, but it only took a few months to change my situation. I quickly paid off my credit card debt and started putting a few hundred dollars away each month in savings. And then we started shopping for our first investment property.
Our first investment was a lot easier to do thanks to Julie's savings. But, you don't need money to buy your first property.
I'm sure you've heard of those no money down programs. I'm not saying it can be done; it can be, but no money down is one of the riskiest ways to buy property. There are only three low-risk ways to buy property, and 2 of them don't require that you have money saved:
1. Cashing out your savings, including stocks, retirement and GICs
2. Equity in your home
3. A partner that has money to invest.
A partner with money to invest is essential if you have no money. However, a partner won't want to work with you if your own finances are in terrible shape. You have to fix your finances before any partner would be willing to work with you. When a partner sees that you have a lot of debt, he/she sees a person that can't be trusted with money- either your own or someone else's. You haven't proven yourself as a trustworthy partner, and investing with you would be too much of a risk.
But, if you come to me and say "Dave, I have found this property that I think is a great investment. I don't have any money because when I graduated from University two years ago, I had $30,000 in student loans. I only have $5,000 left to pay off, but I really want to get started real estate investing and I think this deal will be great," I will be more interested in working with you.
You'll notice the difference; one person is full of 'bad debt' due to poor decision-making and the other person has 'good debt' and has shown that they make sound financial decisions.
Before you can buy a single piece of property, you have to be able to control your own finances. This gives you control of your destiny. Living beneath your means is the only way to do that. If you're unsure about what you make versus what you spend, try this: for the next six months, keep track of every penny you spend. Once it's there in black and white you'll be able to see how you're living and where you can make changes.
It's possible that a few of you may be thinking "well, I couldn't possibly cut back on buying expensive birthday presents", or "I'm not willing to give up my yearly beach vacation". That's fine, as long as you have a plan to save for those things rather than going into debt for them. If you go into debt often when things like this come up, you are a SPENDER, not a SAVER, and are not serious enough at this point about growing your wealth by becoming a real estate investor. - 23167
"But," you say, "Real estate investing rescued those people on TV. They got out of debt and were able to quit their jobs." For starters, it's impossible to believe those testimonials are real, and even if they are, people who can do it in this way are very unusual.
You can, and we believe you WILL, create massive amounts of wealth through real estate investing. Set your goals, find properties that meet those goals with plenty of good research and then hold onto them for at least five years...preferably longer. It works... look at the richest people in your city. Of those that are self-made, I bet at least 25% of them did it through real estate. We always go through the richest people in Canada and Power List for Vancouver, and this number holds up.
The secret to successful real estate investing is to learn what you're doing first, then you can make more investments as your knowledge and assets grow. If you do that, you CAN get rich off of real estate, with less money and fewer headaches than people who try to do it in other ways.
When Julie and I first started investing, we had only had $16,000. Unlike most people I knew, Julie liked to save money. After she graduated from college she continued to live as a student, that is to say, much below her means. Any extra pennies were used to pay off her student loans. Once those were paid, the extra money went to the savings. Her plan was to get her MBA without taking out more student loans.
When we met, I had a property with my Mom that we'd purchased years before, but didn't have much else. After years and years of being a student, I wanted to enjoy the money I was making. I drove a nice new financed Volkswagen and enjoyed my nights out in Victoria. I didn't spend money excessively, but I was carrying credit card debt and didn't have savings. Julie shared her visions of "retirement at 35" with me, and I got excited.
It didn't happen overnight, but it only took a few months to change my situation. I quickly paid off my credit card debt and started putting a few hundred dollars away each month in savings. And then we started shopping for our first investment property.
Our first investment was a lot easier to do thanks to Julie's savings. But, you don't need money to buy your first property.
I'm sure you've heard of those no money down programs. I'm not saying it can be done; it can be, but no money down is one of the riskiest ways to buy property. There are only three low-risk ways to buy property, and 2 of them don't require that you have money saved:
1. Cashing out your savings, including stocks, retirement and GICs
2. Equity in your home
3. A partner that has money to invest.
A partner with money to invest is essential if you have no money. However, a partner won't want to work with you if your own finances are in terrible shape. You have to fix your finances before any partner would be willing to work with you. When a partner sees that you have a lot of debt, he/she sees a person that can't be trusted with money- either your own or someone else's. You haven't proven yourself as a trustworthy partner, and investing with you would be too much of a risk.
But, if you come to me and say "Dave, I have found this property that I think is a great investment. I don't have any money because when I graduated from University two years ago, I had $30,000 in student loans. I only have $5,000 left to pay off, but I really want to get started real estate investing and I think this deal will be great," I will be more interested in working with you.
You'll notice the difference; one person is full of 'bad debt' due to poor decision-making and the other person has 'good debt' and has shown that they make sound financial decisions.
Before you can buy a single piece of property, you have to be able to control your own finances. This gives you control of your destiny. Living beneath your means is the only way to do that. If you're unsure about what you make versus what you spend, try this: for the next six months, keep track of every penny you spend. Once it's there in black and white you'll be able to see how you're living and where you can make changes.
It's possible that a few of you may be thinking "well, I couldn't possibly cut back on buying expensive birthday presents", or "I'm not willing to give up my yearly beach vacation". That's fine, as long as you have a plan to save for those things rather than going into debt for them. If you go into debt often when things like this come up, you are a SPENDER, not a SAVER, and are not serious enough at this point about growing your wealth by becoming a real estate investor. - 23167
About the Author:
Learn How to Retire with Real Estate with Dave's free Real Estate Investing Starter Tips Guide. Learn how to find money for real estate deals, create financial freedom, extra revenue and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to make more money with real estate.
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