Many people don’t know this, but I’m about to spill the tea. You don’t need to be a real estate agent to invest in real estate. There are many house flippers, landlords, and wholesalers that are not real estate agents at all. In fact, I was a real estate investor for years before I decided to become an agent (just to have access to the MLS).
But, you should totally use a real estate agent that has investment experience themselves. It is a completely different ball game and the average agent does not get it. The “investor agent” will not only find you great deals, but they will give you comps based on the after-repair value of the property.
With that being said, here are some different ways to find great deals on properties that you can buy and hold, rent out, or flip for a profit.
There are online auctions and ones that you can attend in person.
From personal experience (at the in-person auctions), people tend to get overly excited and overbid on properties. So, go in with a set number in your mind and plan on not going over that number. Maybe attend a few first and watch just to see how they go.
Some auctions do not allow you to access the property ahead of time, so keep this in mind. As with any property, make sure that you do your due diligence. Check out the neighborhood, get comps, do a property inspection, etc. Also, most auctions require cash or at least 10% down that same day.
Online classified ads websites (like Craigslist or newspaper ads) can be a goldmine for finding properties that are for sale by owner. These are great for doing lease options. I have a friend that would call distressed business owners on Craigslist that couldn’t sell their business after many attempts. She would contact pizza parlors, ice cream shops, and small mom and pop shops.
Then she would get them to do a lease option. This gave her control of the business for a small fee. My friend was able to put better management systems in place to turn the business around and make it profitable. Then, she would exercise her option and sell the business for a profit. This was a win-win situation for everyone.
These are “WE BUY HOUSES” signs. You’ve probably seen these on a local telephone pole near you. But, guess what? They work! Your phone will ring off the hook with these if done correctly. So, it’s highly recommended that you get a Google Voice number or pay-as-you-go cell phone for this. You will definitely want a second dedicated phone number with a specialized voice mail. Unless… um you want your phone constantly ringing on Sunday Funday. No thanks.
This was definitely not a fave of the hubs. We literally spent one weekend going around local neighborhoods (within 20-25 minutes near our home) to hammer and nail yellow signs to telephone poles. But, the response was so HUGE that we went back out and did it again the following weekend.
We’ve found some winners at these events! Most of the people who attend are seasoned real estate investors and are willing to do creative financing (Ahem! Be the bank!) since they get it. These meetups usually have forums and in-house classified ads postings for members on their website where you can find great deals.
So, for example: by attending a local real estate event (that was free) I was able to meet some really cool investors. One guy had a duplex that he wasn’t able to sell. He agreed to do a lease option with me. For a small (non-refundable) deposit, I was able to control the property, put better systems in place, and increase the rents to make a profit.
Then, I was able to refinance it later on and pay him back. But, guess what? Since it was a lease option – I had the option to refinance it – I could’ve walked away if I decided that I didn’t want it. But, I did want it. And that’s the beauty of a lease option. He was a private investor acting as the bank and there was no hit on the credit report.
So where do you find these awesome meetups? They are all over the US. Check out Meetup.com real estate investing groups or the NREIA local chapter.
You guys! You can find awesome deals on houses and land for sale here. Often times the city and county government gets stuck with properties (from tax sales) that never sold. They list these properties on their website for cheap. City owned property deals are great because the city wants to get rid of them. We once picked up a piece of land for $250. I’m not kidding. Just Google it. For example, Chicago City and go to the real estate section of the government website for your town.
The city websites also provide information about investing programs or tax breaks for investors. Some municipalities will do a land trust with the investor for a small deposit. This is a win-win situation because the city gets the property off their books and the investor gets the property financed (by the city) without needing a bank.
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FACT: 82% of women are concerned that Social Security will not be there when they are ready to retire. 🙋
What is financial freedom? Financial freedom to me means not having to depend on anyone to take care of you. It’s about taking charge of your life and your financial future. 🔮 It means that you do not have to depend on a job or a man to take care of you. Because who wants that?
💰 The first step to financial freedom is to get educated about money and investing. Welcome, boo! I got your back. Remember that you are never too young or old to learn about investing. Every expert had to get started somewhere. I know that taking risks can be scary, but you will never get out of your comfort zone if you don’t take that first step.
So here are some action steps that you can take today to get started in real estate investing and begin to take charge of your financial freedom:
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“Own nothing, control everything.” These are the words of John D. Rockefeller. This statement translates to 2 words – owner financing.
An example for real estate is buying a property subject to the existing mortgage or using a land contract and holding the deed. Then rent the property out to a 3rd party tenant and collect the cash flow or sell it for a profit.
An example for business would be to buy an existing business (in distress) using owner financing. You now control the business and put better management systems in place to make it profitable.
In both examples you control the property/business using OPM (other people’s money) and don’t have to personally take the risk. With these techniques, a buyer can control a business or property with usually just a small non-refundable deposit given to the seller.
Subscribe to the Hey Rich Girl blog to learn more about how to user creative financing to get deals done.
]]>It is like a game of Monopoly. If only it were so simple that one could simply flip over the Park Place card and receive money from the bank for a mortgage. Mistakes will be made. How you learn from those mistakes and press on will determine your success. Here are some of the common mistakes in no particular order.
1. Not Getting Educated
Real estate investing has a learning curve. The more that you learn, the less mistakes that you will make. I have been doing it over 12 years now and I still learn something new everyday. Laws are constantly changing daily, even hourly. Read books, take classes, ask questions, get a mentor, get advice from experts.
2. Not Getting Pre-Approved
Unless you are getting owner financing – you must have cash or credit or find someone to partner with who does. Do not be scared to ask the banks for financing.
3. Budget
When rehabbing – you will go over your budget. I GUARANTEE IT! Everyone does it. Always factor in an extra percentage for repair costs above the amount that you estimate for repairs. You will still go over. I guarantee it
4. Location
Location is a key factor in determining a good deal. Some neighborhoods make better “flip neighborhoods” while others make better “rental neighborhoods.” Invest where the people and the jobs are, not in some ghost town with no one around.
5. Using a Team That Doesn’t Have Investment Experience
…Or not using a team at all! Never Ever use a real estate agent that does not have investment experience themself. It is a whole different ballgame. Way too often I see flippers list their property for sale with agents that do not understand the game. These agents overprice the properties because they comp mult-units to single family homes. As a result, the property sits for months causing the investor time and money. The same goes for the rest of your team – your accountant, attorney, etc. should all be investors.
6. Contractors
Always get estimates from at least 3 different contractors and let them compete for the job. Always Always get all estimates in writing. It sounds so simple right? Yet so many people end up in court each year due to price discrepancies and not getting the bid in writing.
7. Buying/Selling Based on Emotions, Not Facts
I think that Armando Montelongo said it best – You fall in love with the deal, not with the house. If the numbers work, then it is a good deal. Investing is a numbers game. Remember, that you are not going to be living in the house. Just because you like a red bedroom does not mean that your potential buyer will like it. Do not put granite counters in a house if the market does not command it. In other words, if all the other houses selling in the neighborhood have Corian countertops, it does not make sense to use granite. You will not get the return on your investment.
8. Taking Things Personally
This isn’t personal, this is business. Tenants will tell you every excuse as to why their rent is late. Learn to say, “I’m sorry that you are having problems, but your rent is still due.” Stick to your guns and follow the lease to a T. If you are supposed to mail a late notice 5 days after the rent is late, then do it! Evictions suck. They are not fun for either the landlord or the tenant. You will evict some really nice people, that just don’t pay their rent on time.
9. Not Having an Exit Strategy
After you buy the property – what do you plan to do with it? There are over 112 different ways to invest in real estate. You could rent it, flip it, wholesale it, lease option it, do a land contract, etc. If you plan to buy and hold or roll your gains over using a 1031 exchange – then you need some type of estate planning to protect your wealth.
10. Making Excuses
…and never getting into the game at all because of fear. Often people will say, “I’m too young, too old, I don’t have enough money.” I hear, “My best friend’s sister’s husband’s brother tried it once…” That’s BS! There is never a better time to start than now. It is the best time in U.S. history to buy! Mortgage rates are low and property is cheap.
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