by
Ron LeGrand
Whoever
said it takes money to make money was someone trying to justify
why they’re broke. It does not take money to make money,
and I’ll prove it. I’ll give you a step by step plan
to buy and sell a house, even if you’re absolutely broke,
have a negative net worth, no job, no friends, no credit and
just got pardoned from the state prison. The truth is, if you
can’t make money without money, you can’t make money
with money!
When I started in 1982, I had no money or credit. I was broke.
I had no credit cards, no rich relatives, not even a wife
working to support
me. I was lying in the gutter looking up at the curb. I’d quit
my job and burned the ships behind me. The only way out was to make
it, or get another job. I had a mortgage and bills just like everyone
else, yet somehow I made it happen. I succeeded in spite of the odds
stacked against me.
You
wanna know why? I’ll tell ya why! I succeeded because I
had no money or credit! Believe it or not, having money and credit
when you begin your career as a real estate entrepreneur can
do you more harm than good. It can ruin you if you’re not
careful. Having no money keeps you focused on doing the deals
that don’t require money. If your credit sucks, like mine
did, you can’t apply for bank loans. Therefore, you have
inadvertently avoided the two biggest mine fields. Not because
you were so smart, but because you had no choice.
Whether
you have money or not, you should learn to leverage your brain,
not your wallet. When you do that, having money becomes a non-issue
because you don’t need it to buy houses. If you write big
checks, you’re always worried about losing those checks.
If you guarantee loans, you risk everything you own. Do neither,
and you eliminate your risk. I bet I’ve said those words
a thousand times, and I still see people who should know better
doing it anyway.
Don’t
get me wrong, I’m not saying you shouldn’t have money.
I’d actually prefer you to be filthy, stinking rich! I’m
just saying you’ll get there a lot quicker if buying houses
doesn’t depend on your capital or the number of loans you
can borrow. Because if it does, you’re a slave to your
limited resources and your business will move at a snail’s
pace.
How
many loans can you get before you get cut off? Only a handful!
Then what? How many deals can you buy if you have to write a
check for each? You get the drift. On the other hand, how many
loans can you take subject to before you get cut off? That’s
right, there is no limit! And no one’s counting, because
it’s endless. You can buy 500 houses and never ask permission
or fill out an application to submit to a brainless loan officer.
The
loans are not on your credit, and you aren’t personally
liable. If disaster strikes before the loans are paid off, like
a deep recession, it’s now the banks problem, and not yours.
If you’re new and I lost you there, subject to simply means
the loan stays in the sellers name, but title transfers to you.
You can learn more about this from the For Sale by Owner Cash
Flow System and the Multiple Offer Strategies Boot Camp.
If
you’re buying junkers to rehab, how many private loans
can you get before you get cut off? All you want! You should
always come away from closing with more than you need to buy
and fix the house. So having enough money to buy a junker isn’t
a problem. The problem is lining up your lender or mortgage broker
to get you the money, which you can do in a coma once you make
up your mind to get it done and quit using money as an excuse
to fail.
“But
Ron, I can’t find any private lenders or mortgage brokers
that will work with me!”
Whine,
whine, whine. Well here’s my response to that: bull! What
you really mean is no one has come to you and begged you to take
their money, so it gives you an excuse to be a lazy loser. Have
you ever asked for money? How many times? What did you say? Who
did you ask? Were they broke? Have you looked for brokers? If
I put a pistol in your ear and gave you ten days to find a private
lender or get exterminated, would you find the money?
Okay,
forget private money and forget rehabs. How much money do you
need to wholesale a house? You guessed it: nada! Well, maybe
a $10 deposit to the seller. Can you raise that all by yourself?
How much do you need to lease option a house and then sublease
it to a tenant/buyer? You know the answer: none!
So
let’s recap for a minute. Taking over loans subject to
on pretty houses usually requires no money from you, or, at most,
a small amount. Yet you can immediately lease option the house
or sell with owner financing and pick up $5,000, $10,000, $20,000
or more from a deposit or down payment, all within a few days.
You
can also buy junkers and rehab them using private loans. Getting
cash when you buy and sell, never spending a dime of your own
money. You can also lease option pretty houses from the seller
and sublease to tenant/buyer, picking up deposits in the thousands
within days and huge back-end checks when they cash out.
Wait,
I’m not finished! Don’t forget about the bargains!
Flip them to bargain hunters and make $5,000, $10,000 or more
and never own the house. All of this with none of your own money
or credit.
So
I ask you, what’s all this crap about how you can’t
get started or get moving because you don’t have the money?
I think I made it very clear, money is not your problem.
Since
I don’t know you, I don’t know what’s stopping
you, but I’ll tell you what stops a lot of folks...grit,
or the lack of it! No guts. Afraid of their own shadow. Going
through life avoiding confrontation or pain. Can’t grow
because they won’t go. You wanna know who seems to do the
best in this business? The people without money or credit, but
lots of grit. And how do you get grit? It’s simple. You
first suffer adversity and get beat up and kicked around awhile.
Then one day you wake up and realize they can't hurt you
anymore and there’s only one way to go...up.
When
you quit worrying about losing, you can start thinking about
winning. You see, people with grit have learned to quit playing
not to lose and begin playing to win. Does this mean you don’t
have grit if you haven’t been to the bottom? Of course
not. Adversity is not a requirement for grit. It just seems those
who are the bloodiest seem to be more fired up and move quicker,
with more passion. They’ve seen the black hole and they
don’t want to go back.
It’s
quite common for those who begin with money to leap before they
look and spend money on stuff that doesn’t produce revenue.
Stuff like office furniture, computers, electronics and foolish
advertising that wastes money. A smart entrepreneur will put
their money in the bank and start their business on a shoestring.
All the fancy stuff doesn’t put a dime in the bank. In
order to do that, you must make offers, and you should be making
them without using your money or your credit.
Here’s
a simple plan to do your first junker deal from your home using
no start up capital (eliminating the risk). When you get that
first check you can use some of it to get the things you’d
like to buy to help you grow the business. This plan applies
to you whether you’re dead broke and bankrupt or loaded
with dough and can’t wait to spend it.
- Ride
around and find 20 ugly, vacant houses. Copy down each address
and get a photo. You’ll find them in the lower priced
areas. Here’s a tip: you won’t find junkers in
gated communities!
- Call
the houses with FSBO signs and see if you can buy them at a
wholesale price of 50 to 60% of the after repaired value or
less. Be sure to let the seller name the price first. “He
who speaks first have big foot in mouth.” Call the Realtors
on listed properties and get the facts. Make an offer if it
makes sense. These will not be your best deals in today’s
market and they’ll require bigger deposits, but can still
be worthwhile. Track down the owners of the houses with no
sign and call or visit them to make a deal. These will be the
best deals, but require more work.
- Persist
with step two until you get a signed contract on an ugly house
that excites you. This step is crucial and you must keep charging
until it’s done. If you’re broke, it should take
about a week. If you’re loaded, it could take a year.
- Have
the title checked by ordering a title search from a title company.
When you learn it’s clear, move to step five. If it’s
not clear, go back to step one or two.
- If
it’s clear, run an ad for three days in your paper that
says “Handyman Special, Cash, Cheap, 555-5555.” Put
it in the investment property section.
- Take
the calls, tell them you’re asking price (which should
be at least $5,000 more than you’re paying) and send
them to the property. Build a buyers list in the process.
- Meet
the first person who wants the house at your price and get
a $500 deposit and a signed agreement assuring they’re
ready to close within two weeks.
- Set
up a closing date with the title company and let them do a
simultaneous closing. Pick up a check and celebrate. You also
may simply assign your contract and get paid directly from
your buyer.
- Do
it again.
That’s
it! Your first wholesale deal. Do you have questions? Of course.
So what! Just go do it and use your best judgment. Will it go
much smoother if you get trained first and are schooled on each
step? Yes, it will. No question. But hey, you said you were broke
and couldn’t afford training. So just go make a mess and
blunder your way through until you get a check. Then get the
training as soon as you get paid.
By
the way, I’ve had people do deals from just reading my
book, others from attending my one day workshop, and still others
from listening to just one tape they borrowed from someone. These
are my kind of people. People who just do it and don’t
listen to dream stealers and broke morons. People who don’t
let any S.O.B. tell them they can’t because they don’t
have any money or credit. People with grit.
See
Ya - The Guru
Ron
LeGrand had to borrow money to attend his first real estate seminar
twenty years ago when he was bankrupt and running a gas station.
Today, he is recognized as the nation’s leading authority
on buying and selling single-family homes for fast cash with
no credit, little or no personal investment or risk. Ron has
personally bought over 1500 houses and still invests in real
estate.