When I originally got started in real estate, I decided to go the conventional path and become an agent. It did not take me long to realize that this was not really the way I wanted to go.
After a few contracts, I realized a few things. I asked myself, “Do I really want to represent other people doing their real estate transactions? Or do I want to be in charge and be able to be the control freak person that I am? Do I want to work for myself or do I want to work for other people?”
That moment was a shock to the system. I knew that I needed to change the way I was engaging with real estate. But I am so glad I did!
How to Get Started Making Passive Income Investments
This series of questions helped me to realize that I wanted to be a real estate investor, not an agent. Since that time, I have invested in dozens of houses. AND I continue to earn some awesome passive income from many of those properties.
When I first got started with my very first deal, I actually was at a real estate auction. They were selling the properties for about $1000. I ended up spending $1200 for 1.7 acres in a failed subdivision. Eventually, I will sell the property, but at this time it is probably worth about $20,000-$25,000.
I like to just hold onto it as a nice reminder of what is possible. And that is without doing anything with a property.
You can look for auctions near you if you search Google for “real estate auctions near me.” That is the simplest way to see what is around you. I don’t really like “auction.com” because it is really just a third-party service provider for foreclosures. It is way too annoying for me. So I prefer to try to find real estate auctioneers near me, because they are always ma and pa auctions. They are SUCH a great way to get connected. Be sure to check it out!
But, while I may have gotten started at an auction, that is not necessarily what you need to do. Oftentimes there are far more effective options around, if you know how to get creative.
Owner financing is an amazing creative financing method to start making passive income investments.
The way to set this up, though, must begin with a house that is “free and clear.” This means that the owners of the house do not have a mortgage on the house. Instead they own it “free and clear.” Got it?
If it is $100,000 that has a $20,000 mortgage, it is not owned free and clear. But, that kind of house is not a lost cause. You still have an opportunity to do a lease option on the property, or subject to the existing mortgage. It is possible to take over the mortgage, or debt, in order to get the deal done.
This is where creative financing is such a great opportunity! It makes it really simple to start making passive income investments.
When you can keep your out-of-pocket expenses low, you se yourself up for a nice financial win on the back end. And, of course, this is one of the best parts of creative financing. It keeps those upfront expenses super low.
Not too long after I started doing these kinds of deals, I had an attorney give me a few templates. They provide a guide for me when structuring deals. They help me to easily outline a contract with a seller in terms that they understand. I have a one-pager for owner financing, or lease options, or even if I am going to assign the deal.
What I have found is that sellers need things kept simple for them. You might know what you are talking about, but they do not. This is all new to them. So, I like to keep things super simple for the seller. They need to understand what is going on from the very beginning. This is meant to be fun and fast and simple for them, too.
My goal to start making passive income investments is to not pay anything upfront.
The way that I make it a good deal for the seller, aside from offering a fair amount, is to let them know exactly when I will make my first payment: usually 3 months out. That provides a firm date for the seller to know by when they can stop their payments, or will receive monthly money. Then I have three months to get things situated and have a tenant in the house.
This is what begins to structure the passive income investments. The initial deal has no money down. And, before I owe a penny, someone else is lined up to pay what I owe. Simple.
Who does not love that set-up? Now, the seller may not be too interested in that though, so you want to focus on how your solution helps them. You can tell them you will be renting out the property. But, don’t make your plans about how you are going to benefit be the focus of the conversation. Make sense?
The most important thing for you to find out is the seller’s problem. What are they concerned about?
If they have a house with a $100,000 mortgage, but it is worth $120,000, then the value of the house is not the problem; the $800 monthly payment is.
So, I offer to take over the monthly payment for them (in three months) so that they can go on their way in life. I help solve their biggest problem. Then, I turn around and put it on the market as a lease option for $1000 to $1200 monthly payment and $120,000 purchase price. But, I also charge a non-refundable option fee just to be able to move in.
It is not “first month and security deposit and a pet fee” to move into my houses. NO. It is $5000, $10,000, or up to $40,000 to move into one of my houses to get the right to buy the house.
This is my all-time favorite way to make passive income investments. Sandwich lease options allow me to buy the property with a lease option where I have the option to buy the house within 5-10 years. I then sell it with a lease option for more money in less time.
People pay me to move in, pay me monthly payments, and then they have the option to buy it within 2-3 years.
It is a glorious process to get passive income investments moving fast and simply. I teach the whole process from start to finish in my FDDF course. Check it out in order to grow your passive income without banks, loans, or upfront money. You’ll thank me later!
The reality is that there are so many great ways to get started making passive income investments. You just need the right tools to get you there.
The tools are available if you are willing to invest in yourself first in order to invest in your financial future. Your dreams are meant to be lived, so get out there and get to work!
Leave a Reply