Some of the richest people in the world have made their millions through real estate investment.
Most of these real estate moguls, like Donald Trump, started out by putting deals together with very little money or credit of their own.
They became successful by making the right connections, getting the necessary information, and moving forward with the correct strategies.
The information and funding are out there, you just need to know where to look, and that knowledge is power. Even a new investor or wholesaler can profit from real estate with no money or credit by following some established and proven strategies, like the ones below:
What will I learn?
1. Wholesale Dealers
You don’t need to own property in order to make money from it. Wholesale dealers net a profit by buying and selling contracts. They source properties and sign agreements with the vendors.
They then advertise and assign the property to another buyer for a fee, which in terms of a commercial property, can be anywhere in the range of a few hundred dollars to thousands of dollars.
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2. Double Closings
Many people don’t realize that double closings are legal, provided it is done properly. The dealer locates a property, enters into a sale and purchase agreement with the owner, and then markets the property as the “owner per contract” (called an A to B transaction).
When a buyer is found, the dealer signs another contract for a higher price (a B to C transaction). The closing is done simultaneously on the same day, and the dealer makes a profit, being the difference in price between the two contracts.
Unless you are dealing with a local bank or credit union, the end buyer will usually need to be a cash buyer since lenders may have issues with title seasoning.
You can learn more about double closing here.
3. Scouting for Properties
Scout dealers search for properties that fit the requirements of what each wholesaler or investor is looking for and charge a fee for locating properties that match the criteria.
The fee is usually $1,000 to $2,000 per deal.
4. Assume the Seller’s Mortgage Payments
Even if the mortgages cannot be taken over, the “due on sale” is only a clause in the mortgage contract and not a law.
You can obtain control of a property through a Quitclaim deed and take over the mortgage payments. Usually, lenders will not care or enforce their policy as long as they get their payments on time.
Meanwhile, the investor has full control of the property and can advertise it for sale.
Once sold, the investor gets to keep the proceeds.
5. Using Transactional Funding for Wholesale Real Estate Deals (flips)
Traditionally the mantra was to buy low and sell high, but now wholesalers make money in real estate by buying low and selling low.
Wholesaling is an attractive real estate strategy, with a minimum profit of $5,000 if you do it right since there are no out of pocket expenses.
You walk away from the closing table with a cheque in your pocket – easy money!
6. Partner Up
There are investors looking for people with great ideas in need of financing.
Draw up an agreement setting out the respective responsibilities and obligations, and very importantly, how the profits will be divided.
If you need a partner strictly for investment only, make sure the agreement specifies that you retain full control of day to day management.
An additional option is to pay for real estate by exchanging another property or offering a specialized skill, like paying for a deposit by providing your services as a contractor to a real estate developer.
The Bottom Line
Many people began investing in real estate without having to save for a down payment or taking out credit.
You could also start making money in real estate with no money or credit of your own by simply using your creativity and thinking outside the box.