How to Invest in Real Estate (with no money) The Strategy.
NOTE: This is the part2 of How to Invest in Real Estate (with no money) The Strategy. View pictures in App save up to 80% data.
Search for the part1 and read first in other to better understand how this strategy works.
Ways to Invest in Real Estate.
Other People's Money. Hi I’ve always wanted to invest in real-estate but I have no money! almost everyone have this problem, I mean before I started I didn't have any dime in my savings account. So I started looking for means to get the capital to start my career in real-estate investment. Here’s few means to sought out capital and get started.
(1) Debt-Based Asset.
A debt where one is entitled to principal and (usually) interest payments from the borrower. One may hold a debt-based asset by directly lending to the borrower, or one may hold it by purchasing the right to receive repayment from the actual lender. Debt-based assets are recorded as assets on a balance sheet, though there is risk of default. Some debt-based assets, notably (but not exclusively) bonds, may be traded on or off an exchange, while others are non-negotiable.
That explained, you saw a house you think will make a fortune when acquired and resold, but you have no more to do the deal. This is where other people's money come in, now you'll put in some work, go find a lender you can borrow money from and bam! Buy and sale-off the house and return his money and the interests. Sounds too easy right? No! you have your work cut out for you. You have paperwork you got to present, how good is the deal? ( Lenders are more interested in this, because it is where their money is going into.)
What does your credit score say about you, are you a trust worthy person. What is the guarantee you'll sell of this property before the payback duration agreement is up. These are the questions and terms you ought to deal with before going down this lane.
However just MAYBE you believe you can pull this off, (mind you bunch of people in this field have built a really good career with this strategy and it worked out fine for them.) Go to real-estate meetings and seminars, present your self to potential investors there are tons of them out there looking for profitable investments to put in their 'hard-earned' money on. Tell them why they should buy that property, additionally the profit and the income they'll generate by putting their money on it. Surprisingly, you'll be amazed the amount of interested investors that'll be willing to work with you. You got to do your part, do some research and propose it in an advantageous way.
(2) Other People's Money; ( this strategy is for people who already amassed a startup capital).
You have a million (1M) in savings. And you're eligible to borrow a million (1M) from a bank or lender, and a property gets listed for sale at (1M) price, when resold it'll earn you (1.5M) In appreciation. What do u do?, you borrow (even though you can easily pay with your own money, but you won't do that). The borrowed money will come with an interest, the payback and interest will be totalling (1.2M). You end up buying the house and resold for (1.5M) then repay loan with interest (-1.2M). Income generated from the sold house is 300,000. Thereafter
Income + Savings = (1.3M).
A lot of investors (the inexperienced ones) will throw in all the savings they cultivated in years because all they see is a 500,000 income when they toss in that 1,000,000 to get their property. Which is easier said than done. Once anything go wrong with the property, they're stuck, their savings is stuck, because all the eggs have been placed in one basket and that basket was tossed high up in the sky and it came down crashing. Lots of investors make this mistake till date , especially inexperienced ones.
Repeat this strategy over and over, build up your savings with incoming cash flows, that's how you keep your capital safe and ready for a sudden purchase that may pop up anytime, this way you won't have your money tied up in any deal. ( Assuming you used your initial capital in purchasing the property and haven't resold, then another property that'll procure a huge profit when resold gets listed) you cant do deal because you already put all your egg in one basket.
Real Estate is not just about buying and selling of properties, it's how you well you manoeuvre in the business. What you buy with your money and how much have left in savings is incredibly important.
You gotta keep an eye on your money, even if you run into risks with the borrowed (1M), you have your initial savings (1M) sitting safe to bail you out.
Furthermore with a really adequate credit score you can secure a loan from your bank or mortgage loans but you need a good credit score and track record to have your loan approved. Same applicable to hard cash money lenders, most are willing to lend you a decent sum with reasonable interest to get your property and then you resale and payback. Do your research on how to find reliable and reputable one; but be cautious of the interest rates, conditions and payback duration of the loan. Don't come to terms with one, compare their interest rates and conditions and then do business with the one that best suits your career.
This is the 'perfect strategy' for real-estate agents, investors with no startup capital at all.
Another property-flipping strategy. Wholesaling is when an agent, investor signs a contract to buy a property that they believe is priced below market value and then sells it quickly to another investor at a higher price for a profit.
Most often, wholesalers seek out properties in need of renovations and present them to house-flippers who are willing to perform the renovations to add more value to the property in order to sell it at a higher price. A wholesaler will sign a contract to buy a property and without putting down any money deposit. Then, they quickly try to find a house-flipper at a premium, getting them to buy the house and earn a profit. Essentially, a wholesaler gets a finder’s fee for brokering a home sale to a house-flipper. This strategy generate their income; however, unlike traditional property brokers, a wholesaler uses their position as the contracted homebuyer to broker the deal.
Wholesaling is a risky venture, also requiring real estate and financial expertise. It demands due diligence and access to a network of house-flippers in order to find a buyer within a short timeframe to sell the property at a profitable price. Otherwise, like house-flipping, you risk not earning a profit or, worse, losing potential money
In addition to be a good wholesaler you have be active, current and updated, you have to see a listed house before anyone does this is crucial, because you have no money to pay for the house but you know who does. Create a network of house-flippers, active and financially stable ones.
Passive Real-Estate investing:
(The Hands-Off Way) This for the big players with all the dough but they don't want to through the process of looking for a property to buy, renovate and resale.
Passive real estate investing offers opportunities to invest in real estate for everyone (Everyone with money): those with extensive real estate and financial knowledge and those with limited or no expertise. Passive real estate investors typically provide only capital and allow professionals to invest in real estate on their behalf. Passive investors hold responsibility only for their investments. In general, passive real estate investments offer a greater potential for passive income than most active real estate investments, which typically more hand-on management.
This is good when you have a huge sum but thinking of ways to invest it in real estate but your knowledge is not enough for the hands-on approach, this method works best and till date the best in passive income generating strategy.
Real-Estate Agency Intern:
Yes you read right, you can become an investor in real estate by interning for a real estate agency or firm. This method requires patience and perseverance. If you're willing to work hard and invest a few years of your time with a good agency you may end up with not only a vast experience in the field but with a chunk of income earned while working for that agency.
Find a good reputable real-estate agency in your vicinity write them for internship, secretly you’re coming in as a marketer or an agent. You may think being a marketer or a salesman is a horrible job, actually it isn't as bad as it looks from the outside.
This method can skyrocket you from a broke unemployed individual to financially stable person in just weeks. The agency you work for will always have a property for sale. And they'll need buyers. Offer to market the property. You don’t need to step out of your house to sell anything these days.
You need only two simple ways to do it.
1. You can take a really good pictures of the properties that your firm put up for sale and post them on buy and sell websites. There's a ton of them out there.
2. Create a page for marketing this properties, you can create one right now on Facebook and run a cheap Ad to increase your chances of getting potential buyers. Use your social media as a channel to fuel your hustle, for every property you referred a buy to your company and they end up buying a property or land, you'll earn a commission on whatever they paid for it.
E.g property bought for a million dollars. you automatically earned a hundred thousand dollars commission for being the referrer (10% commission) easy money. A lot of properties have been bought and sold online just like this, join the trend!
Wrapping it up:
In real estate investment there's a ton of cash to made at every angle, it's just how much you're willing to commit. Real estate investing offers the potential to earn significant returns and add meaningful diversification to your portfolio and income. When managed wisely it can become a valuable source of cash flow in your investment portfolio. As with any investment, real estate investments require you to understand and weigh the risks and potential rewards before beginning.
Whichever way you decide to get involved in real-estate you’ll need varying amounts of time, beginning capital, knowledge, and patience. But in the end it usually pays off. Still the best investment strategy ever.