3 Ways to Make Money in Real Estate Investing Without Ever Buying a Property
There seems to be what I call a fog of information about real estate investing. It is not uncommon for a wannabe investor to pay more money learning about real estate investing than he would pay for a master’s degree. Even after spending all that money, many investors never do a real estate transaction. In spite of this there are some individuals making substantial incomes without actually buying and selling properties.
Following are three techniques that individuals in the real estate industry are using to make money without actually buying and selling properties themselves. I omitted ancillary investments like tax deeds or tax liens, lease options, options, realtors as commissioned agents and other methods that do not require your actually buying properties.
1. Selling Other People’s Properties (SOPPs) is a great way to begin doing real estate deals without having any money in the transactions. The first thing to do is build a buyers list using all the usual networking and internet collection methods. Next, contact every local wholesaler and request to re-sell whatever properties they have for sale. Usually they have no objection but they want you to mark up the properties from their offering price. Finally, you will email your list of the other wholesalers’ properties as they become available. Just because the original wholesaler may not have sold the property doesn’t mean that someone on your list won’t buy it.
You should establish what your compensation is before you email anyone else’s property and I suggest you get it in writing in a simple Partnership Agreement. This re-offering other wholesalers’ properties may require some travel on your part to make sure you get credit for the buyers you send to the property. Don’t send your buyers to properties that have For Sale signs with the wholesaler’s telephone number on them – otherwise your lead will call the owner!
2. To make more money on wholesale transactions, an investor should prospect for and get homeowners to sign a contract with them that has a 15 – 30 day inspection period and then advertise the property to his wholesale buyers list. The investor will not have to have money to close the transaction if he simply assigns the contract to the end-buyer he found. A guideline that I use is; if the profit is less than $15,000, the investor should assign the contract. If the profit is greater than $15,000, the investor should do a double closing so neither the buyer or seller knows the amount of the investor’s profit. In this case, money is needed but the investor can use transactional funding that should be much easier to get than hard money.
Investors who wholesale by selling to other investors, learn very quickly that their buyers list is critical to their success. The more emails on their buyers list, the easier it is to sell their properties and the competition by the buyers on their list leads to higher wholesale prices. In fact, the most successful wholesalers have the largest buyers lists. The continued success depends on their adding names continuously because a buyer may not be ready to buy at exactly the time a property is available for sale, or the wholesaler’s whale buyers may have run out of funds temporarily.
3. The even more productive method of making money in real estate, with no travel involved, is to become an expert in your market. This may sound impossible since you haven’t done any deals and may not have any experience, but you can do this by interviewing local and national experts, posting these interviews on your website, or by doing online teleseminars. All of the national experts and some of the local experts will have products that are commissionable to you. You should be able to line up plenty of speakers who are willing to work with you and planning for an entire year can be fairly easy.
In summary, there are a number of ways to make money in real estate without buying and selling properties. The end result of whether you wholesale other investors’ properties, your own properties, or you start an internet marketing program, your key to success is building a massive buyers list and continuing to add to it as often as possible. It has never been truer to say, “Your power is in your list!”