If you are new to investing and need to learn the best real estate strategies to help you get started fast, then you are in the right place. While real estate is an enormous industry with a million different ways to make money, these last few years have taught me what strategies are best to use when you just don’t have a lot of money to get started.
Personally, I love to work with properties where I don’t have to invest much, if any, of my own money for the purchase. So, today I want to help you to learn the best real estate strategies to invest with no money down.
All-Time BEST Real Estate Strategies to Become an Investor
Before we get started, we need to go over a few things. When I first got started in real estate investing, I made a lot of mistakes. But, mistakes are great because they teach really valuable lessons. And, I want to share those key lessons with you so that you don’t also make the same mistakes.
When I look for real estate properties, I have found that I need to have some rules in place in order to keep my goals aligned with my actions. Here are those rules:
#1 Don’t fall in love with a property.
Remember, these houses are investment houses, not your primary house. They just need to be nice enough for someone else to move into, not the house of your dreams.
#2 No agents.
Yes, I have a real estate license and was a broker for Whitney Buys Houses, but believe it or not, my license got in my way more often than it helped me out. In fact, I actually submitted to retire my broker license at the age of 33 because of this headache. You do not need to a real estate license in order to make great money investing in real estate.
#3 Property is current on payments.
For me and the way I invest in real estate, my properties need to be current on payments. I do not work with foreclosures or properties that are behind on payments. I focus on houses that are free and clear, or fully owned by the seller without any mortgages. The other option is at the very least current on payments.
Not everyone prefers this rule, but my goal and primary focus for my houses is to find ones that are already vacant. These are all over the place if you know what to look for.
Ok, so, now that you know all of the rules, let’s talk about the best real estate strategies to start investing with little to no up-front cost.
Strategy 1: Lease Options
Lease options are my bread and butter. I LOVE them. Basically, a lease option is a really fancy rental agreement that gives the renter an opportunity to buy the property in the future.
Here’s how it works. Do you know anybody who has a house with a mortgage on it? YES, right? Of course, you do. Now, if that person decided that they wanted to rent that house out, would it be weird? No, of course not.
What about if they wanted to sell that house? Would it be weird? Not at all!
So, nobody has a problem with lease options, because it is just a fancy rental agreement with an opportunity to buy the property in the future. That’s the big idea of it all.
Now, I buy houses with a lease option, but I also like to sell my houses with a lease option, too. This is called a sandwich lease option and it is one of the best real estate strategies ever! The way this works is that you have to buy the house with a nice long contract, maybe 10-15 years, and then sell the house on a lease option with fewer years, maybe 1-2 years.
What often comes up when I start to discuss lease options are two other real estate strategies that you want to know, even though I don’t like them: subject to and wrap around.
Subject to means that you are agreeing to buy a house “subject to” the mortgage staying in the seller’s name but the title changing to your name. The problem that I have with this setup is that the banks seem to freak out when this happens. And when that happens they often called the note due upon sale, which means I immediately have to pay the entire mortgage off right away.
I can’t sleep at night with that sword over my head. I do not want to be worried about if the bank is going to call my note due, so I don’t do subject to deals.
A wrap-around mortgage, on the other hand, is when there is an existing mortgage on a property and you take out a whole new mortgage that wraps around the existing mortgage. I don’t do those because it makes the paper trail look suspicious. Y’all ever wrapped up a baseball in a new glove? That’s what it’s like. The ball is the existing mortgage and the glove is the new one.
Again, it makes things look strange. “Why does this $100,000 mortgage on a house suddenly have a new $100,000 mortgage all liened up on one house?” It just gets confusing and is just not worth it. I don’t do confusing and complicated; I do simple and sweet. And that is what a lease option is.
So, lease options are one of my favorite real estate strategies because it lets me buy houses, tell the seller that we can cash them out in about 5 or 10 years, but in the meantime, we’ll be making monthly payments. No problem.
Over that time we will then sell the property to someone else with a lease option and have someone move into the house for us.
They’ll give money to move in, make the monthly payments for us, and pay a premium for the property. We then also give them 1 to 2 years to buy the house. Then, if we have 5-10 years with the seller, we might even have 5-10 potential buyers doing a lease option. I explain more about that here.
You might be asking, “who in their right mind would do a lease option?” Well, let me tell you a story.
Years ago, when I did my first lease option, I met a couple who had purchased their retirement house. But, then their grown daughter came home pregnant and they needed a bigger house for all four of them to live in. So, they had to go. They didn’t want to list it or deal with the stress of it; they just wanted to go.
When we met and I found out about their situation, I told them I could buy the house for $122,000 over the course of 5 years. In addition, I would start making their payments for them. Then, they could go rent somewhere else and focus on the baby on the way.
All I needed was for them to make the payments for three months and then I would start making them in the fourth month.
So, that was the last day of February and my first payment was due in June. In the middle of March, I found a couple willing to buy the house from me for $135,000. However, they were selling a house in Chicago and did not know how long that would take.
So, I told them they could rent the house from me while they worked to sell the Chicago house. Then, once they sold, we could close on this house. They loved the idea and wanted to start paying me right away.
Not a few days later, they paid rent for March-May in advance. The first time I met them, they gave me $3000. Not only were they buying the house for $135,000, but they were also paying $1000 in rent every month until their house in Chicago sold. Y’all, their house went under contract the next week and closed at the beginning of May.
Remember, all during this time, I never had a payment due even once to my seller! I made $13,000 on the house sale difference PLUS $3000 from the advance three months rent. Talk about an awesome deal. I had only about $10 invested since you need to have something invested in the deal to make it legal. But, practically NO money invested.
There were no credit checks or income verifications. I got to help a seller and a buyer. Everything was great for everyone and I made a super sweet payday for my helpfulness.
Strategy 2: Cash
Not everyone wants to do something like lease options and maybe you are one of those people with a bunch of money squirreled away. If so, then this is another of my favorite real estate strategies to consider.
Cash is using real money to close deals. Yes, you need to go through an attorney, but don’t need to use banks or financing. It is not some shady deal made in a parking lot.
The first house I ever bought with cash I bought at an auction for about $30,000. Later, I started renting it for about $750 a month. Around that time I started to figure out real estate calculations and formulas. Thank God! I realized that my rental price was not enough to pay back the house price inside of a few decades or something crazy like that.
Right about the time that these people had been there for about half of their year lease, I was SO excited. I knew that I could find another tenant who would do a lease option. And I did.
My next tenant-buyer paid me $8000 upfront and then started paying me $880 monthly for his lease. And I did not have to do a thing to the house.
Finally, I would pay myself back for the house much more quickly; closer to three years instead of 30.
Another house I bought with cash was a For Sale By Owner. I saw their sign, made my three offers, and one of them was cash. Of course, the cash offer was the lowest. But, the owner needed a new truck and wanted the cash to help him buy it. So, he took the cash offer.
I got the house for $18,000 then I turned around and sold it for $32,000 with a lease option. People started paying me $500 a month with $5000 upfront, AS IS. It didn’t have running water or electricity and I still made a pile of money.
However, those people decided to walk away and not buy the house after 18 months of living there. I made $5000 upfront and then another $9000 from rent in that time. So, $14,000 already in just under two years, and then I did the whole thing over again.
But, the tenant-buyers made some improvements to the house while they lived there, which increased the value of the house.
So, instead of putting it back on the market at $32,000, I was able to bump it up to $52,000! Y’all, I sold it in a weekend on another lease option. $5000 down again and $500 a month rent.
That means that within 18 months I had made all of my cash back in hip national bank and I was selling it for crazy money. I made $34,000 profit with the house purchase price difference alone!
So, who in their right mind would agree to a lease option? Have you thought about anyone who could benefit while I’ve been explaining this? Anyone pop into your mind? How about YOU? You definitely need to know more.
Now that we’ve discussed a few ways to make the money, let’s talk about how to find the people.
What are the best real estate strategies to find leads for properties?
#1 The Yellow Letter
One of the first things I teach my ladies is how to send out yellow letters. These are the letters we send out to people who we think would be interested in getting rid of their property. You may have received or even sent these before. But, I have a strategy when writing these letters to help things sink into the heart of the seller. Believe it or not, money is not always the deciding factor for people. A lot of the time they have life situations happening and they just need to not worry about the house. You can find these situations with nice, fancy houses in great condition.
#2 Bandit Sign
The bandit sign is what you see on the side of the road that advertises houses for sale. My bandit signs advertise my lease options for tenant buyers and they bring a ton of responses. Some bandit signs just do not catch attention, but mine do. That is why it is one of my top real estate strategies that I will always teach to my ladies.
#3 Honey Hole
If there is one thing every real estate investor needs it is a honey hole. The honey hole is an area where we go to make the money, honey. It is where you can find a bunch of different properties in one close location. You can be the “queen bee” here where everyone knows your name and that you are the go-to lady when a seller needs to sell fast.
This is what you need, ladies. Don’t send your yellow letters or put up your bandit signs just anywhere and everywhere. This is a mistake I see investors make all too often. They don’t take the time in the beginning to find out where they want to focus their time.
You want to find an area where you can find great success quickly.
Of course, you could also take the road less traveled like one of my ladies. She bought a $300,000 vacation rental property, which already had a rental program, with no money down on a 15-year payment plan. She also had 90 days before her first payment was due. Her monthly payment is about $1500, but since the property is a vacation rental, it brings in about $10,000-$15,000 a month!
How does that sound to you? Would you pay $1500 to be paid $10,000-$15,000 a month to manage a property? That is an incredible deal!!! And she had three months to get it rocking and rolling before she even had to make the first payment.
#4 Online friends
Let me tell you one of the all-time most important real estate strategies you will ever need to know: Facebook. I’m serious, y’all. Social media has completely changed the way this game is played. So many of my deals come right from Facebook. I share the deals that I am doing and more often than not someone that I know wants to buy or knows someone with a house to sell.
There are so many people on Facebook and if you are willing to engage and entertain them a little, you can keep your pipeline totally full.
There is so much more that I could go on and on about here. But, the fact is the best real estate strategies to become an investor mean you investing in yourself!
You just have to get started and dive in. I love helping other women change their lives forever. There is nothing better than being able to dump the boring job and have your time back to yourself. If you are ready to take control of your life and get to work, then click here.
You have one life to live. How are you going to live it? Will it be in a sea of regret and misery or joy and adventure? You decide.