BY RON LEGRAND— Real estate is a vehicle that cannot only provide you big checks within a few days but also a monthly residual income and a big backend payday. It can retire you so you’ll never have to worry about what the government will pay you when you become a senior and don’t want to work anymore, and the best part is you can make a lot of the money tax-free using your Roth IRA.
The problem is most people believe it takes money and credit to buy real estate and that you need a license or experience. None of that is true. I’ve been teaching people how to buy and sell houses for over 30 years now and to this day I buy 4-6 per month without using any of my own money or credit with one part time assistant and a couple of virtual assistants to get all the work done. I literally spend less than five hours a month in the real estate business to manage this very profitable income stream. It is truly a full time income with a part time effort, which is the way I like all my businesses to produce and assume you do to.
The first step is get a general understanding of how one can actually buy and sell houses without using their money or credit. I find this is the biggest initial hurdle for people to overcome before they get involved in real estate. Yes, you can buy real estate without money or credit, I do it every month, and well over a half million students I have trained directly do the same.
4 Ways To Profit
Retailing – I’m sure you know this one, it’s simply buying a property cheap, fixing it up and selling it to a qualified buyer. I’ve done hundreds of them, and it’s happening everyday all around you. In fact, this is the method of making money in real estate that most people think it’s all about and some spend their entire lives doing nothing but this. It does create a nice check, but it’s also the hardest way to make money in real estate there is.
You must locate the property, find the money to buy it, locate a contractor, usually fire the contractor and start over, and once you get it fixed you have to find a qualified buyer with a credit score high enough to acquire a FHA, VA or Bank loan. This process will take a minimum of three months, more likely 6 months if you do a good job, depending on the market conditions and your renovation. Relax, even if you do choose to renovate a house, you will not be using your own money.
All my students use what we call private money, which is nothing more than individuals making the loan on the property, secured by a first mortgage and getting a higher rate of return from 7%-12% on their money while it’s being rehabbed and flipped. Much of the time there are no monthly payments. The principle simply accrues interest until the house is sold and then both are paid off simultaneously. The profits on this method range between a low of $20,000 to a high of $200,000 depending on the price range you’re dealing in, and some even higher.
Wholesaling – This is simply putting a property under contract to purchase all cash and then flip it to one of the retailers I mentioned above or sometimes even owner occupants at a deeply discounted all cash price. A lot of new investors like this method because it does not require raising any capital from any source, it’s simply a paper flip. Put it under contract, flip the contract, get the check for $10,000 or more. I have some students who are literally doing over 100 of these a year.
With a $10,000 check it’s pretty easy to see why one could get attached to this part of the business. One or two of those a month and it certainly could be called a lifestyle change.
The two methods I have described are referred to as the Ugly House business, meaning they’re both all cash purchases on houses that almost always need repairs, but they are purchased at deeply discounted prices, sometimes 30%-40% of the market value after repaired. This is taking place all over the United States every single day and has been for the entire 33 years that I’ve been in the business.
I personally buy a couple of these a month sitting at my desk from my iPad simply making offers by email to a Realtor who sends me a daily feed of these properties. Once you get a little training you can too. God bless technology.
I know we talked about the four ways to profit and have only covered two so far, but it’s a lot to take in all at once. Stay tuned for part two where I cover lease-options and owner financing.