If you are looking for a way to build long-term wealth, a real estate portfolio is an ideal choice. However, if your funds are low or your credit is not good, you may despair of ever getting into the market. Luckily, there are ways to build your financial “nut” pretty quickly once you have the right tools.
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What is real estate investing?
As a small business or sole proprietor, your real estate investing process can actually start with some dedication, the right software and a simple phone tool. If you have no cash, you can start by bird dogging or driving for dollars for other investors. This includes looking for distressed properties and sellers that you can promote to investors who do have the ready cash and credit to make the buy.
According to DealMachine, you can put every minute and every mile to the best use with the “real-time driving routes in the driving for dollars app.” Tracking your driving routes can really save you a lot of time, which translates to money in the real world!
What are the benefits?
Once you learn to drive for dollars, you can start wholesaling. As a wholesaler, you sign a contract on a distressed property with the intent of turning it over to another investor for a fee. You won’t hold the contract long or be responsible for payments. Functionally, you will never own the property. What you will own, and sell, is the right to buy it for a specific price.
What are the disadvantages?
Being a wholesaler takes some guts. You will need to be able to
- build a promo on the property you found
- talk to investors easily
- talk to sellers, some of whom may be in distress
Being a bird-dogger or driving for dollars takes detail. You need to notice problems in specific neighborhoods, get photos of distressed properties from public access points, and find the owner so you can send them a sale offer.
Best practices for real estate investing
Be ready to start your real estate investing company as a side hustle. If you work days, be ready to drive for dollars on the way to your job and on the weekends. If you’re used to getting paid by the hour, understand that you may need to put in some time before you get a payout, and that your payouts will come in sizable chunks once you have strong connections with investors.
If your plan is to become an investor and collect rents, make sure you have a quality accountant lined up, preferably a small business owner themselves. There are many lucrative tax benefits to being in real estate and your accountant can help you discover the newest tax break and plan for your next investment.
Managing your real estate income
Once you become an investor, you will need to know how to manage your household dollars. If you have a partner with a salary, do what you can to live on their income until your income evens out. If you plan to flip houses, do your best to build up a healthy savings account for the lean times. Flippers can make large profits, but there can be a wait for your payout.
Real estate is one of the few industries that you can bootstrap your way into for very little investment up front. You can start your real estate investing company while still working your job. Be ready for a limited cash payout when you start and put the big payouts back into the business to build an income stream.
