When I got started in real estate investing I was flat-broke, my credit was obliterated, and I was still trying to financially recover from a major business setback. As if that was not enough, the housing market had just cratered and was in a complete state of distress. It certainly was an "interesting" time to choose to become a full-time real estate investor to say the least.
Believe it or not, this ended up being incredibly beneficial for me in the long run for two key reasons. First, I had to take action. I did not have time to wait. I had a stack of bills I needed to pay and I needed to pay them now. Second, I had to learn to acquire properties so cheaply that I would have no problem "quick selling" them even in an awful market. Both of these have been critical skills to my real estate investing success and have allowed me to build a million dollar real estate business.
Here are the 7 real estate investing strategies I used:
1) Wholesaling :
Wholesaling is when you put a property under contract and then assign your rights in that contract to an end buyer for a fee. It takes very little money to do. What you need is knowledge and a lot of "hustle." Wholesaling served as the foundation of my real estate business and is what "kept the lights on" in the beginning.
2) Simultaneous Buy / Sell; Double Close :
Similar to wholesaling in that you do not keep the property, a double close is when you both buy and sell the property at the same time. I would do a double close if I thought the markup was substantial enough that the potential buyer would balk. By having two sets of closing documents, the end buyer only sees the price you are selling the property at and not what you paid for it.
3) Rehabs (rehab to rent, rehab to owner finance, rehab to sell):
Thanks to HGTV everyone is pretty familiar with rehabbing. Basically you are completely transforming a house that needs repairs or updating. The finish-out of my rehabs vary pretty dramatically depending on whether I'm getting a house ready to rent or ready to sell. If I'm looking to sell, I definitely create that WOW factor!
4) Spec Home Building:
Short for speculative, this is building a home without having an end buyer lined up prior to starting construction. I view this as a somewhat risky strategy as at the tail end of every boom speculation runs rampant and often these spec homes wipe people out when the market inevitably comes back down to earth. If I build a spec home it is priced for moderate level housing and can be used as an excellent rental if it does not sell.
5) Owner Finance (homes and land):
When you owner finance a property you are essentially taking the place a lender traditionally would be in. Instead of receiving a lump-sum at closing, you are paid out over a period of years and receive interest. This can be a great tool for creating passive income! You do a couple of months' worth of work upfront and get paid for that work for 15, 20, or 30 years. What a business!
6) Land Investments:
I have bought prime properties that presented incredible value. Again as this is a specific type of investment, every time I buy a piece of land I also make sure I can profitably develop it in case it does not sell. Remember, until you sale, land generally only produces outflows.
7) Rental Properties:
Rental properties have historically been the # 1 wealth building strategy in real estate. Someone is paying for the costs of your asset as you enjoy the benefits of appreciation, equity build-up, and tax advantages. I primarily focus on moderate income housing that performs well in any market environment. Additionally, every rental I purchase is always a positive cash flow deal; Meaning the income more than covers all of the expenses associated with the property. Rental properties are a great way to generate sustainable passive income.
As you can see in the examples above, to be successful in real estate you do not need lots of money or great credit to start. What you need is a willingness to learn and most importantly a willingness to take action. Real estate investing is an incredible tool you can use to transform your life!