Transcript:

Welcome to the Tax Sale Podcast, where tax sale investing is made easy.

I’m Casey Denman, a tax sale veteran and expert, the leading tax sale trainer, author of the tax sale playbook, founder of the tax sale academy and your host here on the tax sale podcast.

Before we get started today, I wanted to thank you for joining me on today’s podcast and to ask you to take a few second to leave a 5 star rating on whatever podcast platform you’re listening on or click that thumbs up button if you’re watching the video version on YouTube. And, as always, at the conclusion of this podcast, if you’re looking to learn more about investing in tax defaulted real estate head to taxsaleacademy.com. That’s taxsaleacademy.com.

Today I’m discussing a topic that will be of interest to many new investors who don’t have much money…or perhaps any…to start out. Today’s episode is all about starting with little money.

I’m going to show you a few strategies to help you get started if you don’t have much money to begin with. Or maybe you have a little bit of capital to start and are trying to leverage it. That’s fantastic and this episode will help with both scenarios.

Now, before we get started too much into it, I want to make something extremely clear. I want you to understand that the idea of starting a business with no money or effort is a complete pipedream. I’ve been in real estate, for, well… closing in on two decades now and I can tell you that to buy and sell real estate requires effort and resources, whether that’s money or other resources we’ll be discussing shortly.

New investors need one of two things to succeed: Resources such as capital or credit to invest, or resourcefulness to invest.

Let’s look at a few different ways to invest with little capital to start. You can use any of these to invest with very little money, IF you approach it correctly. Understand this is just an overview of five different options. This is not the all-encompassing, step by step process to each one.

Alright, so, number 1.

1. The first is your retirement account. I’ve got a few videos on this, and we go into detail inside the academy, but by using a self-directed IRA LLC with something called checkbook control, you can use the funds out of your IRA to invest in tax defaulted real estate. Here’s the quick version of how it works: You put funds into your IRA, possibly funds that are matched by an employer. There are tax benefits to this immediately for most people. From there, you invest in tax defaulted real estate. The capital for acquisition, improvement and everything else comes out of your IRA and not from your normal checking or savings account. The profit that you make from your investment then goes back into that same IRA account. One benefit is that you can use the funds in your IRA to grow that IRA quickly. The primary benefit to many people, however, is that the profits from your investments with those IRA funds are tax deferred. You don’t actually pay any income taxes on those profits, until those funds are permanently removed from the IRA account. This is beneficial because it allows you to grow your IRA account and then as you remove those funds in your retirement years, most people will pay a much lower tax rate at that time. Again, there are lots of details to this so please be sure you review our other videos on it and speak with your financial adviser, accountant and/or CPA.

2. Find a partner. I did an episode on this a couple of weeks ago and hope some of you guys really took that information and ran with it. This is an incredible way to get started with very little or even no money out of pocket. Exchange your knowledge, effort and time for equity in a property or a profit share of some sort. There are a number of ways to approach this, but in short, you’ll usually be putting up the knowledge, time and effort in exchange for some sort of monetary return. This will usually be a minority share of the profits on the property – it could be as low as 5 or 10% and would eventually become larger and larger as you gain experience and your partner gains trust in you and the process. The idea here is that you’ll eventually make enough doing this where you can eventually work in your own wholly owned transactions more and more frequently.

3. Credit cards are another option that some investors use. Combined with a little bit of cash, credit cards are actually how I got my start. In some areas you’re able to pay with your credit card just like you’re buying groceries or something off amazon. Get a property, swipe your card or provide your card number, complete checkout and walk away owning the property. In other areas, you can’t directly utilize your credit cards but you can access that credit by doing a cash advance. These are usually provided at high interest rates and are advances offered by some card issuers that’ll provide an ATM pin number or a check to access the line of credit. The caveat here of course, is to payoff the credit card as quickly as possible so that their interest rates don’t complete negate any profits from your investment. The intention of course is to use cards to jump start your business, not to fund it indefinitely. Don’t get caught up the in the credit card trap.

4. Tapping Equity is another option. Typically, this will mean the equity in any real estate that you own. Depending on your specific strategies, leverage can be a huge game changer for many investors. If you’ve paid off your home or another property or have build quite a bit of equity up, then you could either do a cash our refinance or put a home equity line of credit or HELOC against the property. This will free up your cash to allow you to invest and it’ll be at lower rates that using a partner or credit cards. One of the good things about a HELOC specifically is that you can access the line of credit on an as needed basis. Once you pay off what you borrowed, you stop paying interest on those funds, but they’ll still remain useable on an as-needed basis pursuant to the terms in your loan. Obviously, you wouldn’t want to refi or attach a HELOC to a residence and start making crazy risky investments, so be sure you know what you’re doing before tying up collateral.

5. Another option is a personal loan. And this is a very wide ranging topic. A personal or signature loan is a loan based on your income and credit alone. There is no collateral attached to it. A great way to do this is to start small – perhaps a $2500 or $5,000 loan and then build from there. Check your local bank or credit union. If they can’t help, search online for a local lender. Another option are crowdfunding type sites such as lending club. There are a number of different sites that offer funding options based on income and credit. Do some research and figure out what works best for you.

One bonus one today . . . Cash. I know that this goes against the purpose of this episode, right? But I want you to hear me out. Of course you can invest using cash. But this can come from a variety of different sources. Obviously, your bank account is fantastic. You could also save up a few bucks over time, get a part time job, be a little more frugal; all of those things work great. You must remember that you CAN start small. It’ll likely take much less money to get started than you think. Now, the less money you have, the longer it might take and the more careful and patient you’ll need to be. You also might even have to look in a number of different areas before you find something that works best for your specific goals and budget. And that’s ok. Take your time!

I remind people two things that tie together very closely when it comes to funding your purchases. The first is that if you learn to think outside the box, if you learn to be creative, then you can find the capital. The five ideas we just discussed are just ideas, that’s it. There are dozens of ways to source the capital. If you give me the excuse that you’ve searched for years and just can’t find the capital and can’t save up any money to start, then my suggestion is to put investing on hold, go get a job and then figure it out while you make money. If you push yourself to be creative you can absolutely find a way to start with very little or perhaps even no money.

The second thing is that you should’nt be investing unless you know what you’re doing. It’s that simple. Tax Sale Investing takes knowledge. Lots of it. This isn’t the type of business where you just hear about it one day, watch a video or two, then start flipping properties and making lots of money the next day. If you try this approach, you are nearly guaranteed to lose money. If you remember all that work you did to source those funds, do you really want to lose them? I sure hope not. But I’ve seen it many times. The reason people lose money in this business is because they didn’t know what they were doing. It’s that simple. And of course, the ones who know what they’re doing, make money.

I really urge you to take the time to learn what you’re doing. I’ve got a few episodes on learning how to invest. One of the biggest suggestion I have is to get the proper training! If you’d like our help, I have produced more tax sale training material than anyone in the world and would love to help you. Visit my YouTube channel, be sure to subscribe to our podcast, follow us on Facebook, get involved and interact with us.
My business is setup to help you succeed!

If haven’t done so yet, be sure to pickup your copy of my free book, Tax Sale Playbook, which you can get at TaxSaleAcademy.com. The book itself is free, we just ask for your help covering the nominal shipping costs.

And of course when you’re ready for the detailed step by step training that we offer, head on over to taxsaleacademy.com and click on join. Again, that’s taxsaleacademy.com, click on join, and become a member of The Academy where you can join many others who have used our trainings for success in their businesses.

That’s going to wrap up today’s episode. Thanks so much for listening.

As always guys, if you found this episode helpful it will mean so much to us if you take a few second to leave positive feedback.

Take care guys and make it a successful day.

See ya!