When I was a student at Tulane University in New Orleans, a television commercial aired repeatedly for a furniture store. It was one of those commercials that you didn't want to have stuck in your head, but you did - it was catchy, yet annoying. The basic premise was that a person with essentially no money and no credit wanted to buy furniture, so they would ask a hyped up figure at the store if the customer could still buy their furniture and he would say, "Let 'em have it!" My wife and I still have the occasional laugh about the goofiness of that ad and the absurdity of its message.
I am often asked a similar question about investing in real estate. I have answered in many ways at seminars, in articles I have written, and in real estate courses that I have produced. Each time someone poses this question to me, I get a little bolder with my answer, so here is today's version.
Can you buy real estate with no cash and no credit? Yes.
Should you? Probably not.
Can you, with no cash and no credit, partner with someone who does have cash and/or credit to buy real estate? Yes.
Should you? Maybe. If you have no cash because you lack the discipline to live below your means and save money, then I am not sure you will have the discipline to invest in real estate.
If you have no credit because you've never established credit, but now want to start using it, I ask you... why are you starting now? If you've ruined your credit because you messed up dealing with money, then are you really financially responsible enough to start investing in real estate now?
So, while you CAN buy real estate without cash or credit - through, for example, owner financing, exotic and high risk lender financing, or with a partner - you need to look deep inside yourself and determine whether or not you SHOULD be buying real estate.
One thing I will say is that we tend to become more like the people we spend the most time with. So, if you do find a financially intelligent partner who is willing to have you find the deals and do the work on the property while they provide the cash and/or credit to purchase the house, make sure you pay attention and try to learn their good financial habits. Notice how they save money. Notice how they budget. Notice how they live compared to what they earn. Yes, you may invest in a house or two and learn about investing in real estate, but just as importantly, you may learn about how to manage and deal with money.
James Orr is a professional real estate investor, marketing expert and founder of the LearnToBeRich.com on-line investment game.
He works with a network of real estate agents, brokers and real estate investors across the United States through the AnalyzedDeals.com [http://AnalyzedDeals.com] website.
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