Upon looking at the Real Estate Investing message boards, I've come to find a very common question that seems to resurface over and over again. "I have No Money and I have horrible credit. Can I still invest In Real Estate?" . I want to answer this question once and for all, so I thought about it from the perspective of having absolutely nothing. What would I do if I was homeless and had zero resources?



Well, life is much easier if you have one of the two, but it's not a necessity. With great credit you could write a check against a credit line and buy houses immediately. Obviously, you'd be in an even better situation with pure cash. Still yet, all is not lost if you lack both Cash and Credit. You will merely need to use the following strategies until you can increase either your cash supply or build up your credit:

1. Wholesale properties - Locate great deals, put them under contract and sell the contract to an investor with cash or great credit. If you do a few of these you'll be buying houses for cash in no time. Expect to make from $10,000 - $20,000 per flip depending upon the equity spread. **THIS IS THE BEST SCENARIO FOR A NEWBIE WITH NO MONEY

2. Go through a Hard Money Lender (you can find them at a local real estate investing club) and rehab the property and sell retail. Hard money lenders will usually lend up to 70% of the After Repaired Value and base their decision on the property values not your credit. Hard Money Lenders are usually real estate investors that have amassed a ton of capital and need to make an easy return on their money. Keep in mind, you'll pay for the nose for a hard money loan and I wouldn't use them for anything that I was planning on holding for more than 3 - 4 months total. Like I said, they're expensive but if lack of funds is what's standing in the way of a nice profit, it's well worth it. What's the cost of NOT doing the deal?

3. Purchase the property Subject to the existing financing with a promise to pay the owner's portion of the proceeds in 90 - 120 days.

Example: Owner owes $50,000 and you agree to purchase the house for $62,000. You have the owner deed their property to you and you continue to make their payments every month. In 90 - 120 days when you sell the property or can Refinance (it's easier to refi then to obtain a new loan) the homeowner will get their lump sum check for $12,000.

OR....you could negotiate with the seller to receive that $12,000 over a five year period and you would just make the payment each month to them. REMEMBER--- EVERYTHING IN LIFE IS NEGOTIABLE!! This would be the best bet if you plan on using the property as a rental.

4. Find an established investor in your area and arrange a partnership on a "Deal By Deal Basis". If you locate the properties, manage everything and handle any needed work & the other investor puts up his money you'll split the deal 50 / 50. Don't be shy about contacting other investors with this proposition. BELIEVE ME, if you have a good enough deal they'll want in on it. This is a great scenario because aside from having a financial backing, you'll also be taking advantage of the years of experience that the established investor will be bringing to the table. Believe me, even though you'll be managing everything, the other investor is going to be keeping you in the right direction. After all, he wants to make money on that deal...he'll have a vested interest in it so you'll be getting a free education to boot! You just want to make sure that you have everything in writing to ensure that there are no misunderstandings when it's time to split the proceeds. Write out exactly what is expected of all parties involved and you shouldn't have any problems.