How to Invest in Real Estate with “No Money Down” Part 1

If you read the previous article you know that you’re not going to do real estate without money. Every deal will take money and every business venture will take money. It does take money to make money, but it doesn’t have to be your money.

So having said that, where can you find money that isn’t yours so you can use it to go faster and farther than you could have using only your own resources?

Credit Cards: A lot of people are afraid of credit cards, but you don’t need to be if you understand how to play by their rules.

If you pay your minimum each month on time, isn’t a “15 months at 0% interest” card the same as a free loan? It is, and if you don’t want to pay interest after 15 months, how hard is it to find another credit card that will offer you another 15 months of 0% interest on balance transfers? Just transfer it to another card.

Just be smart about using credit cards and your credit score will actually go up as your total credit limit increases from acquiring new cards.

401K/IRA’s/Stocks: Tired of getting 5% in the stock market (or losing money)? You can self-direct your retirement plan and actually use that money to invest in real estate instead of the stock market.

Sound illegal? It’s not–we’ve been doing it for years. It’s your money, for crying out loud. Why should someone else decide for you what you do with it?

Sound risky? I thought it did too till I realized that the senior citizens who are now working at Wal-Mart and McDonalds likely had their retirement in a safe and secure index fund for 40 years, but after retiring they found out that they were going to out-live the money they had saved and were forced to go back to work.

Take charge of your retirement–don’t leave your future in the hands of a mutual fund manager.

HELOC’s: Got your own house with some equity in it? Borrow against it. That’s not wise if you’re buying a boat or a big-screen TV with the money, but that money is just sitting there in your house doing nothing for you if you’ve got real estate deals you could be doing with it.

Business Lines of Credit: Besides personal lines of credit like credit cards and such, there are business lines of credit available to businesses.

Since it can take a while for a business to build enough history to qualify for a line of credit, it’s a lot easier and faster to assume the lines of credit from an existing business.

The way to do this is to find a business owner that has recently discontinued doing business and assume control of their legal business entity and all attached lines of credit. You’ll have to work out a deal with them, but if they’re not using that business any more then what else are they going to do with it?

Hard Money Lenders: At the very least there are hard money lenders (professional lenders who let you borrow money based on your track record and the deal you’re doing, as opposed to your income and credit score like banks require).

They can be expensive, but often it’s better to work with them than let the deal flop. Hard money lenders are very often the fastest and most reliable money source you can find.

The Verdict?

All these things require you go into debt. That causes some people’s stress level to go up. So here’s your gut check:

Gut Check:

–If you’re willing to go out on a limb and into debt in order to excel in finances and life, give yourself an A+.
–If you’re saying to yourself “I don’t like going into debt–I’d much rather pay for things as I have the money” then you’re going to move at a snails pace creating success for yourself. A job with a 401k is probably a better fit for you.

If you’re going to make money in real estate, get comfortable with debt. All debt is not created equal. There is a difference between Good Debt and Bad Debt. Real estate investors are in a lot of debt, and the more debt we go into the wealthier we become because we know how to make debt work for us.

Just getting warmed up

So far so good? This is just the beginning of where to find money to invest with. The fun part is we haven’t even started involving other people in your investing yet. Stay tuned for part 3 of How to Invest in Real Estate with “No Money Down”.

-Jarom Adair
Real Estate Investing for Beginners

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