Seldom Asked Question #6: Do you need money?
By Robert Orfino
One of the most common questions asked by novice real estate investors is, “do you need money to be a real estate investor”? The simple answer is “Yes”, but it isn’t that simple. We all know that if you lack money the only other value you can offer in its place is time, and as we all know, trading your time for money is what we call a “J.O.B”.
There isn’t anything wrong with working for other people’s money but the idea that you can start with no money and be your own boss is a misconception. If this is your only option however, we all must do what is necessary to get started but the reality is “no money” equals a lot of your time as well as partnering up with someone who at the very least has enough green backs to cover the cost of real estate education and marketing.
If wholesaling is where you’d like to get started, then this would be the lowest out of pocket costs with about 5k in wholesaling education and tools and another 5 to 10k as your marketing budget. Telling someone they can get started and moving on their own in this business with absolutely no monetary resources is a fallacy. Even if you plan to drive every street in your city and find motivated sellers, this would at the very least take a constant re-fill of your gas tank, tires replacement and maintenance. How will you pay your own personal bills early on if you’re driving around 8 to 10 hours a day?
If you’re looking to get into the flipping side of real estate, then you will need at least 25k to 50k to cover the GAP and carrying costs. If you are in the Los Angeles area, you are looking at an amount closer to 100k. Again, you can always partner with someone who has the capital, however, you will still be investing your time and since time = money, you technically are investing money.
If being a landlord is your thing and you have good credit you can get financing with almost no money but when you consider the closing costs and other fees, you will need at least 25k to close the deal.
At every meet up, there are always one or two frustrated and disillusioned faces in the crowd that had been previously led into believing you can come in with zero money and be your own boss from the very start. At our events, we like to provide and teach realistic opportunities and options with real world real estate applications. We make sure our attendees understand that being your own boss requires other people working for your money and not the other way around. You can definitely get there by sticking to a system and by getting a multitude of flips under your belt, but until then, no money down means partnering up and investing a lot of your time. Invest it wisely, attend our next event or meetup.
Robert Orfino, 2016