The most common investor question is: how can I buy real estate without much cash? The answer is simple. It’s the execution that gets a bit more difficult. If you don’t have money to buy a property, ask yourself: what do I have? For the majority of beginning investors, the only answer possible is, I have myself and I’m willing to work hard and learn. If that’s true, , can help you. You can acquire real estate without your own money but you must contribute something else in its place.

The something else can be your own personal efforts. That means your physical work contribution and educating yourself learning how to invest. I can help you with this because that’s exactly the way I started out myself.

” … ask yourself, what do I have?”

It’s important to position yourself to make money. For “hands on” type investors like myself, , have long held the notion that the best type of real estate to buy, when you are just starting out, is something between run­down and ugly and a complete “Junker.” The degree of run-down or ugliness will be mostly dependent upon how brave you are. The braver you can be the better off you’ll be with your first several acquisitions.

Ugly property buyers can always get the best terms. Sellers of these kinds of properties are not in a position to be picky about who they sell to. They can’t play “hard ball” with the price and terms like owners of higher quality, nicer looking properties. The reason is that 95 percent of all potential buyers are “turned off” by the run-down condition and ugliness. Consequently, lack of buyer competition will greatly limit the owner’s ability to sell.

This means you can almost always buy these properties for much less cash up front. Also, it’s likely the seller will be forced to accept much weaker terms. Lower equity payments and carry-back notes are common.

Many of these deals can be 100 percent owner financed. Also, ugly, Junker type properties are generally older properties. Many of them no longer have conventional mortgages like bank loans or savings and loan mortgages to payoff. When they do, they are often low balance loans with good interest rates and assumable to new buyers. For beginner investors, owner financing is the kind you want.

Properties where the owners will carry back the low interest financing are the kind of transactions that allow you to buy real estate with minimum cash down payments and still be able to get cash flow. Bank financing’ with higher interest rates or the variable rate mortgages are not the kind you want.

An important reason to start out with this type of property is it’s a good experiment for you. It provides you with an opportunity to learn what you can and cannot do. If you purchase a run-down house or small apartment building that’s an existing eyesore when you buy it, ask yourself this Question: How can I possibly make it worse? Even with very limited handyman skills, your efforts are still quickly to make some worth­while improvements. If you don’t do things exactly right the first time, so what! Who cares? No one but you will even notice. Simply do it over again until you get it right.

Doing ordinary clean-up is likely to result in a major upgrading. Most certainly it will improve the looks. When you tackle the more sophisticated improvements or repairs, take your time. Read a book or two and look at the how-to pictures. I promise, you’ll be pleasantly surprised to find out how many things you can really do by yourself.

Another important reason for buying run­down ugly houses is that you can add-on value very Quickly to these types of prop­erties. What this really means is that you will be able to buy cheap and sell for a profit in the shortest possible amount of time. You can also increase rents and develop a positive monthly cash flow much more rapidly with these properties, unlike buying pride of ownership properties at top market prices where your only chance for profit is waiting for inflation or appreciation. With fix-up properties you can force the value to go up by your own hand. Upgrading the property automatically increases the value. You don’t need to wait nearly so long to make money.