There seems to be what I call a fog of information about real estate investing. It’s not uncommon for an aspiring investor to pay more money learning about real estate investing than he would pay for a master’s degree. Even after spending all that money, many investors never make a real estate deal. Despite this, there are some people who earn substantial income without buying or selling property.
The following are three techniques that people in the real estate industry are using to make money without buying and selling properties themselves. I left out ancillary investments like tax deeds or tax liens, lease options, options, realtors like commissioned agents, and other methods that don’t require you to actually buy properties.
1. Selling Other People’s Property (SOPP) is a great way to get started in real estate without having any money in the transactions. The first thing you need to do is create a list of buyers using all the usual internet and network gathering methods. Next, contact all the local wholesalers and ask to resell the properties they have for sale. They usually don’t have any objections, but they want you to increase the properties of your offer price. Finally, you will email your list of other wholesalers’ properties as they become available. Just because the original wholesaler didn’t sell the property doesn’t mean someone on your list won’t buy it.
You need to establish what your compensation is before you email someone else’s property and I suggest you get that in writing in a simple Partnership Agreement. This re-offering of properties from other wholesalers may require some travel on your part to ensure you get credit for the buyers you refer to the property. Don’t send your buyers to properties that have For Sale signs with the wholesaler’s phone number, otherwise your prospect will call the owner!
2. To make more money on wholesale transactions, an investor should seek out and have owners sign a contract with them that has a 15-30 day inspection period and then advertise the property on their list of wholesale buyers. The investor will not have to have money to close the transaction if he simply assigns the contract to the final buyer he found. A guideline I use is; if the gain is less than $15,000, the investor must assign the contract. If the gain is greater than $15,000, the investor must do a double closing so that neither the buyer nor the seller knows the amount of the investor’s gain. In this case, money is needed, but the investor can use transactional funds which should be much easier to obtain than hard money.
Investors who sell wholesale to other investors learn very quickly that their list of buyers is critical to their success. The more emails on your buyer list, the easier it is to sell your properties and competition from buyers on your list leads to higher wholesale prices. In fact, the most successful wholesalers have the largest buyer lists. Continued success depends on them continually adding names because a buyer may not be ready to buy exactly at the time a property is available for sale, or the wholesaler’s whale buyers may have temporarily run out of funds.
3. The even more productive method of making money in real estate, without the need to travel, is to become an expert in your market. This may seem impossible since you haven’t done any deals and you may not have any experience, but you can do it by interviewing local and national experts, posting these interviews on your website, or hosting online teleseminars. All of the national experts and some of the local experts will have products that are commissionable for you. You should be able to line up many speakers who are willing to work with you and planning for a whole year can be quite easy.
In short, there are several ways to make money in real estate without buying and selling property. The bottom line of wholesaling other investors’ properties, your own properties, or starting an internet marketing program, the key to success is building a massive list of buyers and continuing to add them as often as possible. It has never been truer to say, “Your power is on your list!”
