I have heard from many “gurus” that the world of real estate investing has the highest “churn” rate of all investment opportunities. By churn rate I mean the number of people entering and leaving real estate during a specified time-frame. From a gurus’ perspective this means an almost endless supply of new, eager customers.
While I have developed my own opinions regarding why this churn rate is so high, I believe one of the major contributors is the answer new real estate investors accept to the Million Dollar question in the title of this article.
And what is that Million Dollar question?
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
As a new real estate investor what strategy should I focus on to get started?
WOW… that is a million dollar question… and the answer has as much to do with the investor and their individual situation as it does the specific market they choose to build their business in.
So… starting with this article and continuing for the next several articles I will attempt to address a usable response to this question.
I will start by identifying and then briefly describing the most popular strategies used by real estate investors. Strategies, which when correctly chosen and ruthlessly executed, will offer the potential for real estate investors to stay in this game and profit!
Marketing — While not a strategy in and of itself, no discussion regarding real estate investing would be comprehensive if it didn’t include a review of the many techniques available to investors to find a property and get it under contract. I will start the next article in this series discussing techniques such as short sales, REOs, probate, and others.
Wholesaling — In its simplest terms the concept behind wholesaling is control. If you can control a property through effective negotiating and a solid contract there are numerous ways to turn your control into a payday for yourself and another investor. A payday that most likely will not cost a significant amount of money to obtain.
Rehabbing — The art of taking a derelict, well OK… it doesn’t have to be a complete gut job, renovating it and selling it primarily into the homeowner market. While the profits can be significant the cost to participate and risks can be daunting.
Landlording —This is true wealth building. Acquiring properties at the right price that provide positive cash-flow and build equity over time, is the secret behind the statement that real estate has created more millionaires then any other investment available. But, as I will discuss, it is not without its challenges.
So… there you have it. the primary strategies so many new investors ask about. Each will be discussed in greater detail, along with their pros and cons, in the coming weeks.