Real Estate Investing: This Tried and Tested Method Could Get You Started
Investing in real estate has its many gainful rewards as we have seen and experienced all these years. In this article, I am sharing the tried and tested method that I have tapped while investing in real estate that I am sure could help you get started with no or little capital.
No matter where you go for advice on building wealth, every expert will tell you it’s all about the investment. Different experts will suggest different routes – invest in stocks, bonds, your education, retirement plans or even real estate. You may be under the impression that you need a ton of capital to get started investing in real estate. However, this is simply untrue. The real estate industry gives plenty of opportunities to get one started, even with low or zero dollars.
In this piece, I have explained in several ways how you can get involved with little or no money investing in real estate. But please take note, this might be a tried and tested method, nevertheless, making money involves hard work especially in real estate investing. You need to put up extra time and effort if you’re a beginner especially as you’re just learning the ropes. That being said, it could be breeze if you apply this tried and tested method and get you started as soon as now.
Investing in Real Estate: Tested Method Could Work with Hard Money Lenders
One option in getting started in real estate investing is to work with a hard money lender. You may have to pay high interest rate and points, but a hard money lender knows the market. They will not lend if they believe it is a bad deal. A hard money lender will look at the value of the property once repaired and normally will lend 75% or 70% of the after-repair value.
You may need some funds to prove you can fix the property and make payments for 6 months.
The hard money lender will reimburse the repair money once you completed the work.
If you don’t have the money you can pull the funds out of the credit card, you can get a loan from your 401K or get a home equity loan.
When I did my first rehab, I used my credit card to pull money for repairs. This may be a bit risky but at the end I made $30,000 profit. Then I used the profit for my next project and never used my credit card again.
Another way to find capital is to get the money from the equity of your home. First, you can refinance your home and take cash out. Or, you can use a Home Equity Line of Credit. Either work, but obviously you have to own a home first in order for this to even be an option.
I always recommend first time investors to work with hard money lenders first, on their first deal, because you have a second opinion to see if it is a good deal or not. Also a hard money lender can tell you if the estimated renovation costs are good or not and if you ask them. They may even refer you with a contractor they know and trust.
‘Boost on the Ground’: A Tried and Tested Method to Hustle for Investments
I understand that working with hard money lenders may get complicated. This is especially true if you cannot show proof of funds to get started. However, there are other ways to find deals with little to no money.
First, there is my personal favorite, which is wholesaling homes. I have a whole piece about it which you can read here. First, you find a home that is perfect for a flipper, landlord or a developer. Next, you put the property under contract. Lastly, you assign the contract to an end buyer or double closing to the buyer at a higher price. You make a profit in the difference. There a few caveats with this method of investing in real estate. It’s a lot of work in both finding a home and finding a buyer.
However, since you don’t spend a dime yourself, it’s very attractive to new investors. I highly recommend reading the piece for a more in-depth explanation and to find out the first steps to get started.
Wholesaling is very attractive to new investors, but you need to know what to do. This method will bring additional headaches if you don’t know how to start.
For this reason, I like to recommend to new investors to locate the property first and make your own research. By doing so, this tried and tested method will pave the way to your initial success investing in real estate.
Here you will learn one of the most important things as a real estate investor: finding distressed homes. Then, pass the lead to an investor for a fee. You can read my article on working as a property locator.
Getting Paid in Experience
All of the options above are for those who know that investing in real estate is really for them and this is how they like to make their wealth. However, there is no shame in testing the waters of real estate investing before jumping in.
Investors across the country are looking to network or to get help on smaller projects, such as posting bandit signs locally or driving for dollars. By starting small, you can build a community of people that you will turn to when it’s time to invest your own capital into real estate.
And never underestimate partnerships when it comes to investing. You don’t have to go at this alone. Robert Kiyosaki once said, “Finding good partners is the key to success in anything: in business, in marriage and, especially, in investing.” Make those connections and feel better about making investments with people you know and trust.
Conclusion
In conclusion, getting involved in real estate investing with $0 is totally feasible. There are all kinds of investors and companies that want to make a deal and if it’s too early for a partnership, there are opportunities to wholesale if you know where to look. The most important thing is knowing you have the time and energy to put towards your new projects. Meet people in the industry. Make sure you research on the pieces of property and the towns you are eyering before signing anything. Go into deals with optimism and get the return your hard work deserves.