There’s no doubt that if you have money stashed away, it’ll be easier for you to get into the real estate investing industry than if you have $0 to your name. That being said, it’s still very possible to get into the business but it involves HARD work that must be done in the beginning to get you off on the right foot.
You see, if you have $10,000-$20,000 saved up to get started, you’re in a better position because you’ll be able to advertise and have deals coming in after a short period of time. You’ll also be able to put money down on a property, if needed. While there’s still a learning curve to be figured out, it’s a much easier path to take, if you’re able to.
Without a decent starting budget, it’s going to take more leg work to find deals and close them. You’ll have to be a bit more creative in finding motivated sellers and wholesale buyers but it can be done.
Pushing your limits and working through obstacles will be what brings you success.
Finding Motivated Sellers
It’s possible to find motivated sellers at any budget.
With little to no budget, your best options are going to be “driving for dollars”, using door hangers, reaching out to “for sale by owner” properties, or rental property owners that are currently looking for tenants.
“Driving for dollars” simply means driving through various neighborhoods in your market and making note of distressed properties or possible vacant properties. If you find a particular property of interest, you can look up information on the house under tax records and you can even write a letter to the property owner letting them know you’re interested in buying their house in as-is condition, stick it in an envelope and mail it out to them.
Door hangers is another cheap way to let property owners know you’re interested in buying their property. They’re inexpensive to make and have printed. You can go on Fiverr.com and have someone design them for you and then have them printed from Vistaprint for relatively cheap.
Keep a stash of the door hangers in your car and as you’re driving through neighborhoods and you spot a potential property to buy, place a door hanger on their front door. Be sure to check local and state laws on the ability to hang door hangers before taking action.
You can look up “for sale by owner” properties as these are people motivated to sell their property and if they haven’t sold it yet, they might be willing to take a lower offer just to get out of the property.
Properties that are “for rent” can be good to contact also as without a tenant in place, no cash flow is being made and they might be motivated to sell the property.
Now if you DO have money for marketing, you’ve got choices to be made!
In addition to the strategies that require legwork mentioned above, you can send direct mail out to motivated sellers and you can also target them online as well.
With direct mail, you can choose the type of list that you’re going to send to, the frequency, along with the style of the marketing pieces.
Things to consider regarding the mail itself are:
- Letter vs. postcard
- Handwritten vs. printed
- Yellow letter vs. formal letter
- Doodles vs. copy only
For online marketing, it’s important to have an easy to find website that allows leads to find out about you and contact you. Make the site easy to navigate so people can easily find out about you, your company, and how you can be a solution to their problem.
Ideally, your goal should be to rank as high as possible on Google when someone is searching for terms such as:
- Sell my house fast in <City>
- Sell my house for cash in <City>
- Sell my house as-is <City>
- Buy my house as-is in <City>
- Cash offer for my house <City>
- Fast cash offer for house <City>
- <City> real estate investors
If you aren’t familiar with building a website or SEO, there are people you can hire to help with this! A real estate investor’s website shouldn’t be complicated but it should be optimized to be seen by locals searching for you.
Determining the Right Exit Strategy
The amount of money needed varies greatly between different exit strategies.
For a rehab, it’s safe to say that you’re going to need liquid funds available in order to close on the property and have it properly rehabbed. You can secure loans that cover up to 90% of the cost of the property and rehab but the money for the rehab itself is paid over a draw schedule. This means that you’ll have to meticulously plan your rehab so you’re able to pay for the work being done in a specific timeframe.
With a rental property, you are going to want a long-term loan option but keep in mind 20% is the standard amount you’ll need to put down for a buy and hold property.
Depending on the condition of the property, you’ll need to fix it up to be move-in ready for your tenants. This cost will vary from property to property and it’s good to budget for repairs after going through the property and getting an estimate.
Keep in mind that when you’re closing on a property that you plan to either rehab or hold as a rental property, that you’re going to incur closing costs and this needs to be budgeted for.
The best option for those on a tight budget is going to be assigning deals to other investors.
Why is this the best option, you ask?
If done right, you won’t have to close on the property (yay for no closing costs!) and you don’t have to spend any money fixing the property up as you’re never taking ownership.
The key to this working is being upfront with the seller and letting them know you plan on finding a buyer who will close on the property.
You still make an offer on the property (ex. you offer $30,000) and this is the amount that the seller agrees to sell for. You’ll determine what you want to assign the contract for and will provide that number to the wholesaler who plans on buying the property (ex. $40,000) and you’ll be paid the difference at closing (ex. $10,000).
Reinvest and Grow Your Business
As you close deals, it’s a good idea to reinvest a portion of it into growing your business. In the beginning, putting that money into your marketing can be the most beneficial plan as with more leads coming in, the more opportunity you have to get more deals done.
In time, you’ll be able to not only build up a marketing strategy that has leads coming in consistently, but building a team will also become a possibility.
Put in the time and effort and you’ll be reaping your rewards in no time.