It’s been said that more millionaires are made every year through real estate investing than through anything else.
Indeed.
There’s a lot to learn. But for those willing to study the ins and outs of real estate investing, there’s a remarkable amount of opportunity.
And you don’t necessarily need hundreds of thousands of dollars to get started — the truth is that you can start real estate investing with none of your own money.
In this guide, I’m going to show you how.
Step 1. Choose an Investing Business Model
When you think of real estate investing, maybe you think of flipping homes or buying rentals. Those are certainly the two most popular methods of real estate investing (thanks HGTV).
But they’re not the only ways to invest.
There are actually a lot of options to get started. Some are easier and take less upfront cash. Others require big investments and include a bit more risk.
Choose a real estate business model that works for your specific situation.
Here are the options (you can click on the links for our full guides for each business model) with dollar signs indicating how much money each method requires. You can do any of these with or without your own money. I’ll show you how to use other people’s money in step 4.
Wholesaling 💲
Wholesaling in real estate is an investment strategy where an investor, known as the wholesaler, contracts to purchase a property at a discounted price and then assigns or resells the purchase contract to an end buyer, usually another investor, for a higher price. The wholesaler makes a profit from the difference between the original contracted price and the price at which they sell the contract to the end buyer.
Wholesaling does not involve the wholesaler taking ownership of the property, making repairs, or being involved in the closing process. Instead, they act as intermediaries, finding properties with potential and connecting them to investors who are willing to purchase, renovate, and either rent or resell the properties.
Reverse Wholesaling 💲
Reverse wholesaling is a real estate investing strategy that involves finding a buyer before securing a property, essentially working the traditional wholesaling process in reverse order. In traditional wholesaling, an investor finds a distressed property, puts it under contract at a discounted price, and then assigns the contract to an end buyer for a fee. Reverse wholesaling flips this process, focusing on identifying the end buyer first and then finding a suitable property to meet their needs. This approach can be advantageous for investors because it can reduce the time and risk involved in finding a buyer after securing a property.
Virtual Wholesaling 💲
Virtual wholesaling is a real estate investment strategy where an investor, or wholesaler, conducts the entire wholesaling process remotely, without physically visiting the property or meeting the sellers and buyers in person. This approach allows the wholesaler to expand their market reach, potentially working in multiple locations and taking advantage of different market conditions.
The main steps in virtual wholesaling are similar to traditional wholesaling, but with a greater reliance on technology and remote communication.
House Hacking 💲
House hacking is a real estate investment strategy where an individual purchases a property, lives in one part of it, and rents out the remaining units or rooms to generate rental income. This income is then used to help cover the mortgage, property taxes, and other expenses, effectively reducing or even eliminating the owner’s housing costs. House hacking can be done with various types of properties, such as single-family homes, duplexes, triplexes, or small multi-unit buildings.
Buy-and-Hold 💲💲
Buy and hold real estate investing is a long-term investment strategy where an investor purchases a property with the intention of holding onto it for an extended period, typically generating rental income and benefiting from potential appreciation in property value. This approach is popular among investors seeking a steady cash flow and long-term wealth accumulation.
Also Read: 7 Steps To Screen Tenants For Your Next Rental Property
BRRRR 💲💲
The BRRRR method, which stands for Buy, Rehab, Rent, Refinance, Repeat, is a real estate investing strategy that enables investors to build a portfolio of rental properties over time while minimizing the amount of cash needed for each acquisition. The BRRRR method is popular among investors looking to create long-term passive income and equity through rental properties.
Note Investing 💲💲
When a purchaser obtains financing for a real estate transaction via a mortgage, they create a promissory note, which serves as a commitment to repay the loan under specific conditions.
For instance, when you secure a mortgage to purchase a property, you sign a document outlining the loan amount, interest rate, payment schedule, and any other pertinent information.
Note investing is the process of acquiring this promissory note, which represents the debt secured by the property, instead of purchasing the physical property itself. By investing in notes, the investor essentially steps into the role of the lender, collecting mortgage payments from the borrower that include both principal and interest.
Flipping 💲💲💲
House flipping is a real estate investment strategy in which an investor purchases a property with the intention of quickly reselling it for a profit. The property is typically bought at a discounted price, often due to its distressed condition or the financial situation of the seller. The investor then makes necessary repairs and improvements to increase the property’s market value before listing it for sale. The primary goal is to sell the property as quickly as possible to minimize holding costs and maximize profits.
Turn Key Real Estate 💲💲💲
Turnkey real estate investing is a strategy where an investor purchases a fully renovated, rent-ready property, often with tenants already in place, allowing for immediate rental income generation. Turnkey properties are typically sourced from specialized companies, known as turnkey providers, who buy, renovate, and rent properties on behalf of investors. These providers also offer property management services, handling day-to-day tasks such as tenant acquisition, rent collection, and maintenance. But it comes with a lot of extra costs.
Of course, you don’t have to stick relentlessly to one investing method. It’s good to have an idea for where you’re going to start. But down the road once you’ve got some experience, you’ll probably want to use multiple of these methods. The best real estate investors let the deals they find determine the investing business model they use.
Speaking of finding deals…
Step 2. Learn How to Find Good Deals
If you’re going to build your own real estate investing business — whether you’re wholesaling, flipping, or holding — then ground zero is finding good deals.
This is literallly the most important skillset you need to build.
It’s a common refrain amongst real estate investors that you “make money when you buy”. This is because good deals are good deals… and you can always find a way to profit if you’ve got a good deal.
By “good deal”, I’m talking getting a discount on a property so you can flip it, hold it, or wholesale it for a profit. This means you can’t just look for stuff on the MLS… you need to look elsewhere.
Here’s a great video guide from Ryan Dossey that’ll show you how to find off-market deals.
Here are some other ways to find great deals (click the links for more how-to details)…
Direct Mail — This consists of pulling lists of motivated sellers from a tool like Propstream and then sending direct mail to those homeowners (we recommend Ballpoint Marketing).
Driving For Dollars — This is the process of driving around your target investment neighborhoods looking for distressed properties, writing down the addresses, and then marketing to those homeowners.
Foreclosures — Foreclosures and pre-foreclosures often make great investment opportunities.
Cold Calling — Whether you drive for dollars or pull a list through propstream, one way to reach out to those homeowners is through skip tracing to get phone numbers and then cold calling to figure out if they’re interested in selling. It’s awkarwd and uncomfortable. But it’s free.
Follow Up — Every experienced real estate investor knows that 90% of deals don’t happen during the first contact. It’s all about timing. And you need to follow-up with your leads over a long period of time if you want to create a consistent deal-flow for your investing business.
SEO — Getting your website ranking for local keywords like “sell my house fast in [city]” is a great way to get deals and motivated sellers coming to you.
Facebook Retargeting — If your website is getting a fair amount of traffic through SEO, you can use Facebook retargeting ads to get in front of people who visited your website but didn’t take action.
3. Understand Real Estate Investing Numbers
We just talked about finding great deals.
But there’s a problem.
How are you going to find great deals if you don’t know how to spot great deals?
And spotting great deals is all about the numbers.
- How much money will it cost to repair the property?
- What is the after-repair value of the property?
- What’s the expected return on investment?
(You should also understand these common real estate investing terms)
More specifically, here are the metrics you need to understand and learn how to calculate when you’re doing your due diligence on a property (click the links for full guides)…
Rehab Costs — How much will the property cost you (or your cash buyer if you’re wholesaling) to repair to the point that it’s either sellable or rentable? This is important to know so you can determine your potential profits.
ARV — This stands for after-repair value and it’s the expected value of the property once it’s repaired.
Max Offer — This is the max amount of money you should offer for the property. You can use the 75% rule to determine this, which you can learn more about in this video.
Rental Property ROI — This stands for return on investment and it’s a metric used to measure the profitability of rental properties. It takes into account the revenue generated by the property, as well as its expenses including mortgage payments, taxes, insurance, and other fees.
You can click on those links to learn more about how to run comps on a property.
Or check out the video below…
If you’re still nervous about running comps and figuring out the true value of a property, cost of repairs, and max offer… then consider partnering with an experienced real estate investor to learn the ropes. Or you can pay for a professional inspection on the property (not a bad idea when you’re just starting out).
4. Find Money
Regardless of the real estate investing business model you choose (and despite what other people might tell you)… there’s no such thing as a free opportunity.
Even if you’re wholesaling, you’re going to need a bit of money for marketing and finding deals.
And if you absolutely don’t have any money to spend, then you’re going to have to pay in terms of your time — you’ll have to door knock, drive for dollars, and/or cold call.
But there’s good news.
Even though you need money for real estate investing, you can use other people’s money. You don’t have to dip into your own savings account.
How?
Check out this video to see how Ryan gets private money…
Private money is the gold standard for real estate investing. If you can use other people’s money and set the terms for paying them back, then the sky is the limit and you can grow your REI business much faster.
Also Read: 3 simple ways to buy real estate with creative financing in 2023
5. Create Processes To Scale & Win
Doing your first deal is an exciting milestone… and it’s a game-changer for most people.
But if you plan to create a business and invest in more than just one property, then you’re going to need to create systems to streamline the deal-flow process. The best part is that you can make a lot of this process super hands off.
Here’s what we recommend.
Carrot Site — This will give you a website for finding motivated sellers and help you rank in Google for high value keyword phrases. These sites are an awesome way to generate high quality leads in any market.
Ballpoint Marketing — These direct mailers get record-high response rates because they’re hand-written.
Call Porter — When you start marketing, you’re going to get a lot of phone calls. Call Porter is the only answering service in the world designed specifically for real estate investors. Our reps are U.S.-based and trained to speak with and screen motivated sellers. We can answer the phone for you and schedule follow-up calls so you never miss a deal again.
Property Management — If you’re buying rentals, then I highly recommend working a property management company so you don’t have to manage the properties yourself. This makes the process 100x easier.
CRM — The more leads you generate, the more cluttered things are going to get. And earlier, we mentioned how important it is to follow-up with your leads. This is why having a CRM is so important. We recommend REsimpli as our #1 pick.
Final Thoughts on Becoming a Real Estate Investor
This is just the tip of the iceberg when it comes to being a real estate investor. There are many other strategies and techniques you can learn and master in order to increase your profits.
But, don’t let all of this overwhelm you. Start with the basics we discussed here today and if you want to dive deeper than you might consider one of these real estate investing courses or one of these books on real estate investing.
All that’s left is for you to take action and learn lessons in the cold, hard pit of experience.
Off you go!