A lot of people have made huge wealth from real estate than every other industry, however, even more people are unclear if venturing into real estate is a decision that truly worths it. Most people think they would need some huge capital to start. But being able to make money in real estate isn’t something hard if you are serious and focused enough, even as a beginner.
Kent Clothier had his first escrow for $500. He sorted for a distressed home and also for a potential buyer who is motivated enough, and he brought the two together for a deal. Clothier has gone way farther today, as he currently flips more than a thousand properties and also manages over five thousand under his own company.
Another man, Graziosi, who had a very messy background, lived in a bathroom at the age of 12, for 12 months with his father. He grew up in a trailer park with no advantages. He also had help, no capital for his startup. But today, his portfolio has over four hundred properties after he managed to make some initial cash. The examples we have in this industry are massive and unlimited. So what is the take home here?
You need to be equipped with the know-how of excelling in the real estate industry much more than money. In fact, you actually do not need so much capital to begin to make huge cash in real estate. Get serious about this.When you understand your path forward after getting a lay of the land, you are sure to make strides.
How do you generate income from the property market? Here are things you DO NOT really need, to earn as a beginner in real estate:
1. You do not need credit – With your commitment, there are ways you can go about it even when you have a poor credit. The truth is that several successful real estate individuals kicked off having poor credit or no credit at all.
2. You do not need to have any significant startup capital – Apart from maybe a few hundreds to open escrow in the business, you do not necessarily need cash. Well, this would mean sorting for distressed properties, lesser priced homes and flipping contracts. That would also mean that you’ll have to sort for hard-money lenders or other kinds of investors that can help you push your deals through. And even for homes to be renovated, so long you have the know-how on getting the cash.
3. Major assets aren’t needed – Beginners often have the misconception that they would have to put up some key assets in order to acquire a piece of property or earn a contract. You should rather be more concerned about finding how creative financing works than finding major assets.
What To Do To Make Money In Real Estate
As far as making money in real estate is concerned, there are two ways you should put your mind on. You can earn passively by buying and holding. And you can earn actively by doing renovations, flipping contracts, pulling property development deals, and adding value in other areas. After gathering good experience, it would become much easier to achieve.
And if you are thinking, ‘How can I invest in real estate with no money?’ Here are a few options to consider:
a. Bring in a potential investor partner with good money.
b. Trade in fixed assets such as jewelry, cars, and much more.
c. Seller financing via leasing.
d. Take out a line of credit with home equity.
e. If you know someone else who might be in a distressed situation, you may opt in to take over their mortgage payments.
f. Consider harnessing a peer-to-peer lending network.
Is it safe to invest in real estate?
It is totally safe. In fact real estate has been one of the leading sources of huge wealth for several people around the world in entrepreneurial history.
How does a real estate investment work?
With your income surpassing your expenses you are on the right path of investment in real estate. This concept of cash flow is known as positive cash flow. And it can work well for commercial rentals and long-term residential as well as short-term vacation rentals.
So, there are 8 proven ways you can make money in real estate whether it would be on the passive or active income. It all depends on which of the strategies you are able to implement.
8 Proven Ways To Make Money In Real Estate
1. Lease Options
The lease option in real estate is a great way to start getting involved as a beginner and also earn big without necessarily putting in any cash or having some credit at the outset. You lease having an option to buy. It works perfectly when the industry market is growing as you are creating a pre-set price at which you can purchase the particular property later.
For instance, if the property market progresses to a great significant extent, you’ll be able to purchase the property at a discount. You could even consider turning your own right of purchase for that property over to someone else in sales. So long you are given this option as a consideration and not a thing set in stone which indicates that you must buy the property at the end of the lease, then you could sure make good profit from the effort.
2. Short Sales
In the case of Short sales, the current owner of a property is behind on mortgage but the particular property is yet to enter foreclosure. And since the property is being sold out at a lesser amount as is owed on the present mortgages, everyone involved has to consent to the transaction for the transaction to take place. You will be able to make quick money here without making investments in some long-term renovations.
But then, it is often a bit tricky succeeding here or in any other default-type auctions. You would be required to be outrightly for the properties, which may have to happen site-unseen. But unlike auction, Short sales are way better as it gives an advantage of you checking out on the proposed property and doing a proper negotiation before acquiring. And that is risky especially if you are just starting out. Seasoned investors have reduced risk with the move.
Another thing to note about short sales is that it takes time. But that is nothing to be worried about as the time taken can be worth it. Short sales can produce some huge instantaneous returns for you. You will be able to rake in several tens or hundreds of dollars once the property purchase becomes a reality because the bank is enmeshed in a poor investment. But it depends on how so bad the bank wants that particular property unloaded, you need to still negotiate for a good price.
3. Invest In Commercial Real Estate
If you want to make a very good money from real estate, you should consider investing in commercial real estate. Developers in commercial real estate do not only have to flip properties, they also focus on developing the properties, and also increase their net incomes by adding by adding value to properties via upgrades and renovations. The developers also consult on projects which would need the effort of more seasoned real estate investors to materialize.
Since people are always in need of retail and office spaces to get their businesses moving, this continually yields some good money for you. You should also consider finding more potential ways as you grow, such as, developing large scale buildings, opening up shopping malls, and so much more.
Founder of 5209 investments, Ali Safavid, revealed that commercial real estate comes in the league of leading and most lucrative ways to make income and profits in the real estate market. Keep finding ways to add value to the exchange, and you’ll be able to generate huge income.
4. Turn To A Hard-Money Lender
As a hard-money lender, you would give out loans to people who may ordinarily not qualify to receive such loans. This often requires that you have some good capital behind you. The loans are often accompanied with high interest rates as they are given for a very short period of time. You could turn to these lenders if you have an already sure deal which only requires some cash to close the deal.
If you have the capital too, you could launch as a hard-money lender. Though you shouldn’t expect this to be a likely first way for you to begin to rake in money as real estate. Build a good portfolio of deals, a network, and capital, and you will be able to offer bridge loans for huge profits.
It doesn’t matter if you lack the cash to put into real estate. As long as you are able to identify good deals successfully, generate a high probability of success, and some amount of money, you’ll be able to find potential investors to put down required funds. You’ll receive some good interest rates even though it has higher risk, but then, high rewards too.
5. Long-Term Rentals Of Residentials
People will always be in need of a place to live in. This means many people will get involved in properties for rent. Keep the location in mind while doing a significant level of due diligence to source on your properties.
Real Estate is nothing without location. The location of a property determines virtually everything about that property – accessibility, security, value, and more. For you to be able to rent out a property to a tenant on a long-term, location is the determining factor. A great location is a very juicy option.
This approach means purchasing a property with some funds for a down payment, and then holding the property on a long-term. Depending on the situation you are in, you can have the property easily at a well reduced or no down payment. And this is more essentially true if the property is a pre-existing income-producing one.
A residential rental could be a great investment if there’s a positive cash flow. But then, it is not likely that you’ll find that on a platter of gold. Well, maybe if the current owner has personal reasons to unload, maybe divorce or other reasons that makes liquidating the property a necessity.
6. Home-Renovation Flips
There is huge progress in the traditional renovation flip market. But while there are so many profits to take from this, finding your foot as a beginner can be a bit tricky. If you venture without the required know-how, you’d likely find yourself losing out.
According to an expert in the real estate business who has flipped over two thousand homes in Illinois and Iowa, Matt Larson, he advised going after the ugliest homes in the nicest and most preferred neighbourhoods. Matt revealed that the real value is hidden there. But the challenge here aside finding those homes, especially as an agent who isn’t well-networked, but more importantly understanding the value of your after-repair.
So, after you have finally done the repairs and fixed the necessary things, how much exactly will be the new value of the home? For you to be able to get an accurate worth for property, you’ll need to have good communication with a general contractor. And if you understand what the underlying costs really are, and the potential value, making money engaging in home renovation flip is rather straightforward.
7. Vacation Rentals
This method can open doors for good profits in the real estate market. You will be able to make passive income with it, and also make a considerable steady cash stream with tourist locality that is highly-trafficked. Miami, Los Angeles, and many other hotbeds for tourists are popular for increasing demand for vacation rentals.
The interesting part is that you do not have to be the owner of the property. In fact, many of the companies wide successful in property management and are specialize doing vacation rentals are not owners of the properties. They only focus on offering a topnotch consumer experience.
To get involved, network with others doing similar thing around. Build on your relationship with owners in your locality. Create systems, build bonds. Provide great user satisfaction. Go the extra mile for consumers occupying any of the homes under your care. And if you own a property, get it listed on websites like FlipKey, Airbnb, and HomeAway, before you start managing vacation rentals for other owners.
8. Flip Contracts
Another proven way to make money with real estate is to flip contracts. You can do this without needing to put up so much in credit or capital. Just bring together a distressed seller and a motivated buyer. It may seem a bit difficult figuring out a distressed seller, but when you are able to bring the players together, you have avoided the worry of hunting for buyers after entering a contract. That is more risky.
When you locate a buyer and seller ahead, it is easier to enter into a contract without fear of being stuck considering how you’d go about closing escrow on the property. The tricky aspect is finding homes that are vacant or that are already behind on their mortgages. These kinds of homes are primed for such opportunity.