4 real estate investors who have bought property with none of their own savings explain how they raised capital to get started. 'We're using other people's money to make us more money.'

  • Buying real estate typically means coming up with cash for a down payment and closing costs.
  • If you don’t have cash, you still have options, like raising capital.
  • Before you go out and raise money, though, focus on finding a great deal.

One of the biggest barriers to entry when it comes to buying real estate is capital. Between the down payment and closing costs, purchasing a home can require a lot of upfront cash.

It’s possible, however, to get your foot in the door with little to no savings.

Insider has spoken to a handful of successful investors who have done so, including 20-year-old friends and business partners Caleb Hommel and Chuck Sotelo. The San Diego-based investors, who now own three properties in Texas, had about $300 in savings each when they decided they wanted to try out buy-and-hold real estate investing.

Investors Natia and Jervais Seegars also started with very little — they had credit card debt and “terrible credit,” they told Insider — before scaling up to five properties that bring in $30,000 a month in revenue. Insider verified all home ownership and property revenue claims.

While both pairs of investors didn’t have cash in the beginning, what they did have was time to do legwork and find great deals. They then presented those deals as investment opportunities to people who had cash, but didn’t necessarily have the time to do the deals themselves.

Raising capital and funding projects with ‘other people’s money’

The Seegars couple managed to fund their first two properties with little to no money down without turning to investors. For their first home, they qualified for a grant that covered most of the down payment, and for their second, they found a lender willing to do 0% down up to a $1 million purchase price, they explained.

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When they were looking to expand from two properties to five, they wanted to continue using as little of their own money as possible. But they no longer qualified for down payment assistance and they likely wouldn’t be able to score another 0% down payment.

“I knew that there had to be funding out there for individuals who were looking to start businesses or wanted to use funding for investments,” said Jervais. “So we did a lot of research and came across private money lenders that were able to provide the funding that we needed to get us started.”

Natia and Jervais Seegars, real estate investors and founders of YourLifeStyleStrategy.

They ended up raising about $500,000 from private lenders, they said, which financed their next three properties. They purchased them all within 45 days of each other in late 2021.

“We were able to use the strategy to get what we call ‘other people’s money’ to finance our investments,” said Natia. “So we were able to continue to save our money while using other people’s money to make us more money.”

Hommel and Sotelo also raised private money to buy the three multi-family properties they own.

For their first property, a $900,000, 10-unit building in south Texas, they found three investors who each put in $30,000. They found new investors for their next two deals, a $700,000, eight-unit property and a $725,000, 10-unit property.

As for how their investors get paid, “we’re paying them 8% interest annually,” explained Hommel. “We give that out in monthly installments. And then we also give them a buy-out at a certain year so we can buy our equity in the deal back from them.”

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That means they’ll eventually own the property outright despite using none of their own money.

Find the deal before you find the money

Anyone can raise private money to fund a deal if you approach it the right way.

Hommel and Sotelo’s strategy is to focus on the deal itself before even thinking about finding capital.

“The deal always comes first,” said Hommel, who explained that if you find a good enough deal, the money will come.

For their first property, which took about six months and hundreds of phone calls to find, they didn’t start looking for money until they were under contract. It put them on a deadline of about 60 days to come up with the cash, but they ended up only needing about half that time.

“Raising the money wasn’t as hard as I expected it to be,” said Hommel. “It was just reaching out to anybody and everybody, presenting our deal, and seeing if they’d be interested.” It helped that they’d put so much work into finding an excellent deal, he added: “Once we realized that all we needed was the deal to be good enough, the process became a whole lot easier.”

They reached out to friends, family, and other San Diego-based real estate investors and ended up raising the $90,000 they needed for that first multi-family in about 30 days.

Every real estate investor has their own definition of a “great deal” and strategy for finding them. Hommel and Sotelo started by honing in on a specific market. San Diego, where they live, is a competitive market to get into, they explained, so they started researching various markets all over the country.


“We were looking for somewhere that had a lot of inventory, the prices weren’t too bad, it was growing a lot, and it had favorable landlord legislation,” said Hommel. “That led us to Texas and Florida and the reason we chose Texas was because it was closer to where we lived.”

Once they narrowed in on Texas, they started sorting through listings. They had three specific requirements: they wanted a multi-family property since they’re “a lot more scalable,” Hommel explained, they wanted to inherit tenants, and the seller had to be open to seller financing.

The main reason they wanted to buy a property that was already occupied by tenants was because they wanted positive cash flow from day one. Specifically, they wanted a 10% cash-on-cash return, explained Sotelo: “And if it’s not filled [with tenants], it’s most likely not going to be hitting that 10% cash-on-cash metric.”

While presenting a great deal to potential investors is key, so is your delivery, they young investors have learned. The conversation shouldn’t be focused on you asking for money; rather, you want to emphasize that you’re offering an opportunity for the investor to make passive income.

In the beginning, they didn’t have as much confidence, said Hommel but, “once we learned how to talk to people and ask the right questions, then it got a lot easier. We stopped going around telling everybody we were 18 years old and people started perceiving us as experienced investors.”