Stop telling me you don’t have money to invest

Last updated on 22 Dec 2024

I ask people all the time to invest with me. From small amounts to large, it doesn’t matter what I propose and it’s rare that I actually get into details before I hear this common reply: “I don’t have that kind of cash”

It’s amazing how many times I don’t even get to say a dollar amount and still hear people tell me that they don’t’ have it. When I used to sell cars I would hear a similar response: “I’m just looking” I wouldn’t have even heard the person’s name yet and already they are refusing to deal with me. I can understand more in the car business because people generally hate buying cars and a car purchase is a guaranteed way to lose money so I don’t blame people for not being excited about it. What about investing though? People don’t want to make money either? And why default to thinking it’s a shortage of cash?

I asked a friend recently to learn about real estate with me. He replied that there is no point to learn about real estate because he doesn’t have the money to buy any real estate. This is such a common default position, and while I’m not sure what causes it I know that it’s fundamentally misguided. Imagine the opposite:

If someone dumped a large bag of cash on your lap today, would you be a successful investor?

OF COURSE YOU WOULD!!! You’re brilliant with money, you would be responsible, and you would make good business decisions. Just like you do now right? RIGHT?

Unlikely, the more probable scenario is that you would treat that windfall cash the same You would blow through and waste that money faster than you’ve ever wasted money before. How can I be so sure? Let’s look at other people who have run into windfall cash:

Lottery winners – well known to be awful with money and bankrupt soon after winning
Professional Athletes – These guys go broke so fast after leaving sports it’s depressing
Inherited youths – Just watch an episode of “my sweet 16” to see how family money can help young people make really responsible economic decisions
Famous movie stars – Depp, Stallone, Snipes, Mike Tyson,

So cash didn’t help these people, in fact, cash is what hurt them. People say “you need money to make money” but just because it’s a common phrase doesn’t mean it’s correct, or complete. What you really need if you want to make money is knowledge. You need to understand how systems work; you need to instill confidence in the people you deal with that you can pull it off.

What would you do with $100,000?

If you don’t already have a concrete plan of action, then it’s most likely you’ll just blow it. This is what everyone already does; consider how people spend bonuses, raises, or tax returns. People don’t have a money shortage problem; they have a money implementation problem. If you can’t properly invest your $3,000 tax return, why would you be so arrogant to think you could properly implement a $100,000 cash windfall? Have you ever said or heard the phrase “I’ll save more when I make more?” this one is also total nonsense. When you make more you’ll just buy a fancier car and nice new clothes because “you deserve” it.

Start saving and learning immediately.

Let me provide some perspective on my own story. I was broke for years and thought the same thing “I would love to invest if only I had some cash”, and when I thought that way I never did have cash. When I started reading about personal finance once of the things it taught me was that successful people aren’t created from windfalls, they are created from grinding out small returns until they grow into massive portfolios. The reason people don’t do the hard little stuff is that they don’t think it works, and it’s really not fun at all. The important part here though is that grinding out small returns, when you can’t really afford to invest much, is what will make you a great investor. It’s too easy to blow through large volumes of cash, but when your balance sheet is tight it forces you to become efficient. You have to learn this by grinding and when you do it’ll stay with you forever. If you get a large handout of cash you’ll be too tempted to pay for your inexperience with excess cash, you’ll be able to afford to lose money and subsidize your business, You’ll have to ask you won’t know any other way.

Here is some good news though; it’s unlikely that anyone is going to drop a big cash payout on you anytime in your life. So you’re going to have to grind out small savings, learn to invest small amounts and grind out small compounded returns until they do become large amounts. While you’re doing this you’re going to learn a ton about maximizing return on investment and protecting your hard-earned portfolio. So when the time finally comes that you do have a large swath of cash, you know what to do with it and the knowledge is by far more important.

You can buy a house right now, with zero cash.

You really don’t need cash for real estate. Now I just explained how the lack of a large cash account isn’t’ the biggest problem (but you should save for it anyway), however, I want to explain how much more valuable the knowledge is over having cash. So let’s assume you have $0 to spend towards investing, but you had a deep understanding of the economics and infrastructure of real estate. I’m going to use my last deal (READ: DEAL #4) as an example of how to accomplish this:

Say I borrow $60,000 from a person
I find a foreclosure for $36,000, and it costs $24,000 to rehab. I’m all in for $60,000
I get a tenant and rent the place out.
I got to a bank and ask for a loan, they say the house is worth $95,000 and will give me a mortgage of $71,250
I pay back the original $60,000 and keep $11,250 in my pocket
The house pays the mortgage back, short/long term expenses, and then I’m still left with $200/month profit and have nothing invested (free income!)

Sounds easy right? It’s not a trick, it’s just easy. So if you don’t’ feel like you can pull this off, there must be another reason besides money, because we just showed that YOUR money isn’t’ needed.

Can you find someone to loan you money? No? That’s because you probably aren’t a good investment. If you know this process like the back of your hand, you’ll find someone to take a risk on you. Like this whole blog has said, you need to be better first, and then the money will come.
Can you find cheap foreclosures? Shouldn’t be too hard, they are everywhere in markets all across the United States. If you haven’t seen any, its’ because you haven’t spent much time looking.
Do you know what the bank is going to look at when considering a mortgage? Do you know how they are going to evaluate the unit and what they will lend based on that? If not, you’re just one loan broker phone call away…

So in a few short minutes, I’ve displayed how possible it is to buy a house with no money, make it profitable, and put you in a position to do it again. There are certainly obstacles to this process, but that’s business, it’s not hard but it does take effort. If the only hurdle between you and financial freedom is knowledge, you must ask yourself if you’re going to let learning be the thing that keeps you poor. There are many other ways to buy houses without money as well (owner finance, joint ventures, etc) and there are even more ways to buy houses when you have a LITTLE bit of cash. I’ve bought 3 houses with small down payment products now, one of them I bought with only $2,500 and it made me $20,000 the next year!

What to do while you’re learning

Have I convinced you that real estate investing is not a money problem, but an education problem? I hope at least partially! I would like to explain this phenomenon worked for me in a real-world situation. When I first started I didn’t have any money or know-how, so I set out to accumulate both the slow and hard way. I started listening to podcasts and reading blogs every single day, while doing this I was simultaneously savings money as much as I possibly could (READ: HOW I SOLVED THE MONEY PROBLEM). After some time went by I learned that I could buy a foreclosure with 3.5% down, well that was only a few grand and because I had started saving I had already accumulated the whopping (#sarcasm) $2,500 I needed. If I had waited for a large unexpected cash payout to buy, I would have waited forever, if I simply saved money and didn’t’ educate, it would have taken much longer, but since I started on the education immediately it was easy. I could have certainly found someone to lend me the $2,500 at that point as well, so the only factor that really was necessary was the knowledge.

The reason you aren’t investing isn’t due to a lack of capital, its because you don’t know how. If you knew how you could get started immediately and if someone dropped 100K in your bank account you would still need a few years of learning to properly deploy it. If you want to start building wealth, start educating immediately, that’s the real thing that’s holding you back. Not having money is just an easy excuse similar to “I’m just looking”, it may be socially acceptable but it’s not helping you make any money.