If you think you’ll need a lot of money to get into wholesaling, you’re wrong. If anything however, this is a really common misconception among those who intend to join the wholesaling world. Fortunately, in this episode, our very own Cody Hofhine discussed how you can start wholesaling even if you have a very limited marketing budget.
If you’ve always wanted to get into wholesaling but are hesitant because you don’t have any money on you, you’d surely find this episode of massive value. You’ll not only learn wholesaling basics, you’ll also get some expert advice from someone who started from the bottom and rose to become one of the best in the wholesaling space!
WIP 478: Do I Really Need Money To Make Money In Real Estate?
A lot of people ask me, “Do I need money to get into real estate?” Many times, we’re fearful of getting into real estate, thinking you need to have a ton of money. I’m going to talk a little bit about what it is about the money, what money do you need to have and what money do you not need to have. A lot of the questions that people are asking, you won’t need money for that. Let’s break this down, so it makes sense so that you have confidence moving forward. You know what you do need and what you don’t need. Thinking about where I was years ago, I remember thinking to myself this same question.
I was living paycheck to paycheck. I didn’t have much money coming in. I had so much more month left at the end of the check. It didn’t add up. I found out from talking and networking with people that you can get into the game. You can get into real estate with very little money. Again, I had little money to no money. Let’s talk about some of those costs. What is it that you do need and what don’t you need? The first thing is it depends on what strategy you’re going to go for. If you’re like, “I want to get in real estate because I want to buy rentals,” there is a good chance you’re going to need money for a down payment, a mortgage.
Making Money In Real Estate: There are ways to invest that take no money. You can be the deal finder.
If you’re getting into what people call wholesaling, where you are simply a deal finder. You’re going out there and finding deeply discounted properties that you can put under contract and then have cash buyers that you’ve met over the timeframe that you’re building up. When they tell you, “When you find deals, let me know about it. I’ll buy them from you.” You’re building up that cash buyers list. If you’re simply wanting to be a deal finder where you find these off-market discounted properties where you can get them at $0.50 or $0.60 on the dollar and then simply turn them to a cash buyer and you make some money from that, no, you won’t need a whole lot of money.
In most states, you won’t need a close on the property, but what you will need is you’re going to need some marketing dollars or a lot of sweat equity. If you have a tight or non-existent budget, there are still things you can do, but there is a cost. Even though people are like, “I’ll go Driving for Dollars,” there is still a cost. You’ve got to drive there. Maybe you’re walking the neighborhoods. Maybe that doesn’t take gasoline for the car, but there is still cost. Minimal cost.
There are so many ways to invest. This is the beauty about real estate.
If you’re Driving for Dollars, you’re going to need some money to keep fueling the car so that you can drive around these neighborhoods and find distressed properties. That is money that is going to have to come out of your pocket. Maybe you want some of the heavy lifting done by direct mail where maybe you’re working a 9:00 to 5:00 job and you’re trying to send out postcards to targeted lists that you’ve got from the county or city like tax delinquent. You need some marketing dollars that you’re going to have to send out that direct mail so that you can get motivated sellers to call you. There are some costs there, but again, it’s minimal.
When most people ask the question, “Do I need a lot of money to be in real estate?” It’s because they’re thinking more towards what I thought and that was, “I can’t buy a home. How do I buy a home? I can barely buy the groceries at this point for the family. How am I going to buy a home and how do I get into real estate?” For that question, this is the beauty about real estate. There are so many ways to invest. There are individuals that buy homes, they keep them for rentals, they put 20% down and then they have a cash flowing rental property because maybe they make a lot of money and they are able to do that. Don’t get caught up that’s the only way to invest.
Making Money In Real Estate: Make your hope, desire, and drive to get in real estate squash the fear that you need money. Yes, you’ll need a little bit of money, but not a lot of money.
There are ways to invest that take no money. You can simply be the deal finder. When you go out and send out a little bit of money into direct mail and people call you and they’re like, “I do want a cash offer for my home,” what you can do is put it under contract. In most states, you can do an assignment. Assignment is you put a home under contract and you simply assign the contract. You put it under contract with the seller and you take that contract and sell the contract, not the property, because you don’t own it. You sell the contract to a cash buyer. That would be an assignment and you make an assignment fee. That’s one way of doing it.
There are some states out there that don’t allow an assignment. What you would need to do is do a double close where you buy and close the property. You’re thinking, “Cody, I don’t have much money. How do I close on this property? How do I buy the property?” There are many unique ways out there. One of them is through what they call hard cash or transactional funding. If you went to local real estate investor associations or you google hard cash in your state, you’re going to see people pop up or you’re going to go to local meetings and ask for hard cash lenders. People are going to be like, “I lend cash.”
Nine times out of ten, if someone is willing to lend on a deal, it’s because it’s a deal.
Start to learn about it. What these individuals are willing to do is lend you the money to close on it, so now you own it. You turn around and sell it the next day. You’re holding onto it for 1 or 2 hours over a 24-hour period before funds closed funds. That’s where you have to borrow this transactional money or hard cash money. Here is the good thing, if you’ve got a great deal and hard cash lenders are like, “I’ll lend on this.” 9 times out of 10, if someone’s willing to lend on the deal, it’s because it’s a deal. If it’s not a deal, they’re going to tell you, “I can’t lend on this deal. It doesn’t make sense. It’s too risky.”
That’s the other reason why it’s good to find these transactional lenders. When it comes to buying a home, you put a home under contract, you find a cash buyer that says, “I want this home. I want this deal.” In your state, you’re not allowed to assign a contract. It’s okay. Close on it with transactional funding and then turn around and sell it to that cash buyer and make your money. That’s how you would do it. This whole thing about money, I don’t want to keep this simple, you’re going to need money. When people say, “You don’t need any money.”
To some point, that’s true. You’re going to need some marketing dollars. You’re going to need some fuel for your car to go Driving for Dollars. There is money involved, but it’s nominal. People with restricted budget don’t have much money. Can you still get in the game? You can. I would never let that hold you back. Had I let that hold me back? I didn’t have much money. I wouldn’t be where I am. The job I was in was a dead-end job. The job I was in wasn’t allowing me to grow how I knew I could grow. It wasn’t allowing me to hit that financial level that I knew I was capable of. It wasn’t going to do it.
It’s going to take so many years and if it ever came, if I was lucky. Real estate was able to excel that. It was able to get me to a level where I was like, “This is the financial level I want.” Ultimately, real estate has led me to become financially free. I hope your desire to get into real estate is so high that this fear of not having money is washed away. You’re not scared to move forward. You’re going to move forward. You’re not going to sit there and be like, “I don’t have money, but I want to get in real estate, so I’m going to sit here.” Make your hope, desire and drive to get in real estate squash the fear that you need money because you need a little bit of marketing dollars.
You need a little bit of money to get out there and do things to get people to respond to you or to your marketing or Driving for Dollars looking for abandoned homes or homes that are distressed. That’s going to take some money, but it’s not a lot of money. Ultimately, you can close on properties without using your own money. You can assign in some states where you don’t even need to close on the property. My main thing is going out there and take massive imperfect action.
Don’t sit. Don’t be in this education space where you’re getting all this information overload or paralysis by analysis. I don’t want you sitting there. I don’t want you in this YouTube University stuck trying to learn. The people that are doing deals or bettering themselves are the ones that take action, not build a perfect plan or wait until they have 1,000 or 10,000 hours of watch time learning this. Get out there and take massive imperfect action and learn from those mistakes. You’ll be better off than the person that’s taking no action at all. Take care. Get out there and start doing deals.