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 very limited marketing budget.
If you’ve always wanted to get into wholesaling but 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!
- How you can gauge if you’ll need money or not
- What a deal finder is
- What you can do if you don’t have any marketing budget
- Ways you can invest without money
- What an assignment is
- What is meant by double close
- Unique ways to close deals without money
- What hard cash means
- Why it’s good to work with transactional lenders
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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Hey guys, a lot of people ask me, “Do I need money to get into real estate?” And so many times we’re just fearful of getting into real estate thinking you need to have a ton of money. And so 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? And a lot of the questions that people are asking, you won’t need money for that. So let’s break this down so it just makes sense so that you have confidence moving forward. You know what you do need and what you don’t need.
Now thinking about where I was maybe just, Oh five, six years ago. I remember thinking to myself this same question. I was living paycheck to paycheck. I didn’t have much money coming in. In fact, I had so much more month left at the end of the check. It just didn’t add up. But I found out from just talking with people, networking people, that you actually can get into the game, you can get into real estate with, I wouldn’t say no money, but with very little money. And again, I had very little money to no money. So 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, depends on what strategy you’re going to go for. If you’re like, “Hey, I want to get in real estate because I want to buy rentals.” Yeah, there’s a good chance you’re going to need money for a down payment, a mortgage. If you’re getting into what people call wholesaling, where you are just simply a deal finder and you’re going out there and finding deeply discounted properties that you can put under contract and then ultimately have cash buyers that you’ve met over the timeframe, that you’re building up. That when they tell you, “Hey, when you find deals, let me know about it. I’ll buy them from you,” and you’re building up that cash buyers list. If you’re just simply wanting to be like a deal finder, where you find these off-market discounted properties, where can get them at 50, 60 cents on the dollar and then just simply turn them to a cash buyer and then you make some money that. No, you won’t need a whole lot of money. In most states, you won’t need to close on the property, but what you will need is you’re going to need some marketing dollars or a lot of sweat equity. So if you have a tight, tight budget or nonexistent budget, there’s still things you can do but there is a cost.
So even though people are like, “Well, I’ll just go driving for dollars.” There’s still a cost, right? You’ve got to drive there, maybe you’re just walking the neighborhoods. Okay, so maybe that doesn’t take gasoline for the car, but there’s still cost right? Minimal cost, but 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 nine to five job and you’re just trying to send out postcards to targeted lists that you’ve got from the county or the city, like an example, tax delinquent. And 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. So yes, there’s some cost there, but again, it’s minimal.
I think when most people ask the question, do I need a lot of money to be in real estate? I think it’s because they’re thinking more towards what I thought. And that was, “Oh, 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 I tell you, this is the beauty about real estate. There’s so many ways to invest. Yes, there’s individuals that do buy homes and yes, they keep them for rentals and yes, they put like 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. But don’t get caught up that that’s the only way to invest. There’s ways to invest that take no money.
You can simply, like we were talking about just a second ago, 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, “Hey, I do want a cash offer for my home.” Then what you can do is, put it under contract and in most States you can do what’s called an assignment. Assignment is you put a home under contract and you simply assign the contract. So you put it under contract with the seller and then you take that contract and sell the contract, not the property because you don’t own it, but you sell the contract to a cash buyer. That would be an assignment and then you make an assignment fee, is what they call that, right? That’s one way of doing it.
Now, there are some states out there that they don’t allow an assignment. So what you would need to do is do what I call like a double close, right? Where you actually buy the property and close the property. And you’re thinking, “Well, Cody, I don’t have much money. So how do I close on this property? How do I buy the property?” There’s so many unique ways out there and one of them is just through what they call hard cash or transactional funding. So hard cash, transactional funding, if you just went to local like 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 and people can be like, “Yep. I lend cash,” and 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 and then you turn around and sell it the next day. You’re holding onto it for like an hour, two hours, over a 24 hour period before it funds close, funds, right? That’s where you have to borrow this transactional money or this hard cash money.
Here’s the good thing though. If you’ve got a great deal and hard cash lenders are like, “Yes, I’ll lend on this.” Nine 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, “Nope, I can’t lend on this deal. It just doesn’t make sense. It’s too risky.” So that’s the other reason why it’s good to find these transactional lenders. So when it comes to buying a home, like you put a home contract, you find a cash buyer that says, “Hey, I want this home. I want this deal.” Right? But 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 the difference, make your money. Right? That’s how you would do it.
So this whole thing about money, I don’t want to keep this simple. Yes, you’re going to need money. When people say, “No, you don’t need any money,” to some point that’s true. But if we’re really thinking about it, well, you’re going to need some marketing dollars. You’re going to need some fuel for your car to go driving for dollars. There’s money involved, but it’s nominal. And yes, people with a restricted budget don’t have much money, can you still get in the game? Absolutely. Absolutely, you can and 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 today. The job I was in was kind of 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 just wasn’t going to do it. It’s going to take so many years. And if it ever came, if I was lucky, but real estate was able to excel that. It was able to get me to a level where I was like, “Yes, this is the financial level I want.” And ultimately real estate has led me to become financially free. So I hope your desire to get into real estate is so high that this fear of not having money is just washed away. That you’re not scared to move forward. That you’re just going to move forward. You’re not going to sit there and be like, “I don’t have money, but I want to get into real estate so I’m just going to sit here.”
No, make your hope, make your desire, make your drive to get in real estate squash the fear that you need money. Because yes, you need a little bit of marketing dollars. Yes, you do 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. And then ultimately you can close on properties without using your own money and you can assign, in some states, where you don’t even need to close on the property.
So my main thing is go out there now and take massive imperfect action. Don’t sit, don’t be in this education space where you’re getting all this information overload or analysis by paralysis, right? Where you’re just sitting there or analysis paralysis, paralysis by analysis, right? I don’t want you sitting there. I don’t want you in this YouTube University, stuck, just trying to learn, learn, learn, learn. The people that are doing deals or the people that are bettering themselves are the ones that take action, not build a perfect plan or wait until they have a thousand hours or 10,000 hours of watch time learning this. Just get out there and take massive imperfect action and learn from those mistakes and you’ll be better off than the person that’s taking no action at all.
Take care and get out there and start doing deals.