Starting With $0 Money
Episode 417: Starting With $0 Money
Almost everyone in this industry started out with little or nothing. If you’re under the impression that you need money to make money in this business, then you’re not going to get anywhere fast. In this short solo cast, Mitch Stephen talks about the importance of understanding that anyone could be starting with $0 in their real estate journey and that it is alright. He then further discusses what it means and how you can figure out how to make money from that starting level. Take heart as Mitch shows you the possibilities there are to still thrive despite having nothing.
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I’d like to do a short solocast here for you. It’s called Starting with Zero. I want you to remember that most all of us in this industry started with little or nothing. Almost everyone I know started broke. If you’re under the impression that you need money to make money in this business, then you’re not going to get anywhere fast. It’s the chicken or the egg syndrome. We need to be able to figure out how to make some money starting with zero.If you're under the impression that you need money to make money in real estate, then you're not going to get anywhere fast. Click To Tweet
Remember when you’re starting with zero, you’re a professional middleman or you’re a professional deal finder. Sometimes you’re a professional deal writerupper. You have a house that you can buy at a steep discount. Let’s say it’s a $200,000 house and you can buy it for $125,000. Let’s say that house needs $15,000 in minor repairs and it’s worth $200,000. You buy it for $125,000, then you put $15,000 in it, so you’ve got $140,000 in it. There’s $60,000 upside in this deal. The problem is you don’t have any money, but you found the deal. You go ahead and you sign that deal up and you write a contract. You get that contract signed by both parties, both the buyer, you and the seller. You’ve got to get some time in that contract so that you can find the money, partner or the wholesale person to buy it from you. Let’s start from the beginning. To find the money, you would want to give yourself as much time as possible. Give $100,000 in the non-refundable option fee for a 45-day due diligence period. That will give you 45 days that you can go before you have to cancel the contract and get your earnest money back.We need to be able to figure out how to make some money starting with zero. Click To Tweet
The earnest money could be, “I did hundreds of deals with $10 worth of earnest money.” Let’s say the earnest money is $300, $500, the tiniest little earnest money that you could get. Now you have this contract. It’s signed by both parties and that contract becomes your personal property. You could walk around town and look for the money by saying, “I’m looking for $140,000 first position in this property that’s worth $200,000. I’m willing to give the first lien if you will loan me the money.” That’s a little rich for the beginner sometimes. What usually the beginners do is they wholesale this deal for $3,000 or $4,000. They assign the contract. It’s called an assignment fee or a wholesale fee. You assign the contract and the person that buys it from you has whatever days are remaining in that 45-day due diligence period to close. That’s one way to do it. The other way to do it is to walk around town with your contracts and invite people that do have money or do have the resources to get the money and offer them to be your partner, let’s say a 50/50 partner.
You walk around town saying, “I’ve got this property. It’s going to require about $140,000 to get it ready to go. I’m willing to split the $60,000 upside with whoever brings the money. I have the contract and I’m looking for someone who has the money and we’ll split.” That’s another way to do it. You’re in the middle here in these two cases. The other way to do it is to wholesale it and again you’re in the middle. It’s a much smaller fee. You do better off if you can find the money or you can find the partner with the money. Remember, we all started with zero and there are definite strategies on how to be the middleman and how to work your way up from broke into a position where you’re not broke.
At some point, you don’t need people to fund your deals or to come on as partners. When we started, we were all in need and all had to give up a large piece of our deals to get the money or to get the person who had the resource to get the money. Don’t be afraid if you have zero. Don’t be afraid to start out with little to nothing. I have a book that I wrote called 200+ Ways to Find Bargain Properties. It’s in the My Life & 1,000 Houses series. It’s book number two. It’s available on my website, 1000Houses.com. You can also read the reviews and see all my books at Amazon. The first book is My Life & 1,000 Houses: Failing Forward to Financial Freedom. The second book is My Life & 1,000 Houses – 200+ Ways to Find Bargain Properties. The third book is My Life & 1000 Houses: The Art of Owner Financing. This has to do with buying houses with other people’s money and then selling your houses on 30-year fixed notes or long-term notes where people aren’t required to refinance or to cash you out. They make their payments until the end. Check it out at 1000Houses.com. There’s a lot of free stuff there too.Don't be afraid if you have zero. Don't be afraid to start out with little to nothing. Click To Tweet
If you go to 1000Houses.com, click on the free stuff tab and check it out. I have an hour and 45-minute webinars on how I deal with seller financing and how I do all things. There’s a ton of information there. A lot of people say I give away too much. I know that by giving, people will learn and get enthused about these strategies. Then a certain amount of people will realize that a coach or a mentor would drastically shortcut the learning curve and save a lot of mistakes, waste of time and anxiety. If you’re that person, you can also find out about my mentoring classes and stuff at 1000Houses.com. Get as much free as you can. It’s all over there for you to get. Are you ready to start with zero? It’s possible and you can do it. Check out the kinds of strategies that you have to do and the person you have to be when you’re starting out with nothing. It’s been done many times by many people and a lot of investors that I know are wealthy who started with nothing. This is a solocast, short and sweet. You all have a great one.