More and more people are realizing that now might be the perfect time to start getting into the business of investing in real estate. Typically this consists of taking old or dilapidated properties that will not be sold and fixing them up so that they can be effectively listed and sold. Since buyers are even more picky about the properties they are interested in, sellers who need to sell fast and have a property that needs some work may be more inclined to accept a lower, cash offer for their property, even if it is less than they would like to sell. This presents a golden opportunity if you are interested in investing in real estate.
Of course, entering this type of property means that you will also take some risk. What if the repair costs are more than expected? What if the repair takes longer than you estimate? What if the property doesn’t sell for the price you thought it would be? What if it takes too long to sell? Because of these concerns, many potential real estate entrepreneurs may consider one of the many alternatives to investing in real estate as a way to get started and minimize their risk. These alternatives can be a great way to just get your feet wet and test the business or as an addition to your real estate business.
Exploring potential bargains like a real estate bird dog is one of the best ways to start as a beginner with little money to invest. Simply put, a bird dog is someone who finds potentially good deals for other investors, acting as their eyes and ears in the field.
When they search for a good property, they inform the investor and if it turns out to be a good deal, then the bird dog earns a fee. The amount you win depends on what market you are in, how good a deal the property is, and how much information you can provide to the investor. But it’s not uncommon to earn fees of around $ 1,000 or more for a potential client on a good property.
The reason why hunting birds is such an effective strategy for someone just starting out is that it requires almost no cost in addition to your time. This is also an especially good option if you have a job that requires you to drive or walk around neighborhoods as part of your regular duties. But even office workers can vary their route to work, scouring neighborhoods over lunch, or spending a few hours on weekends looking for potential bargains. That makes bird hunting a great part-time business that anyone can start with.
Wholesaling is another alternative that is one step beyond being a bird dog, but carries a bit of additional risk. While bird tracking is simply finding the property and letting another investor know about it, wholesaling is actually going one step further and getting the property under contract. Once the property is under contract, and as long as the contract is drafted correctly, that contract can be assigned (or sold) to another investor for a reasonable fee. Again, the actual amount will vary based on the property, the total number, and the market you are in, but it is quite common in some markets to have wholesale rates between $ 2000 and $ 20,000.
Why would another investor pay so much? To take advantage of! Many investors are simply too busy to find their own deals. It can be a lot of work to find a really good property and many investors rely on wholesalers and bird dogs to help them get deals and are handsomely rewarded for doing so.
The downside to wholesaling is that you actually have a property under contract, so you need to know that you have other investors waiting behind the scenes who are serious buyers with the ability to close. That is why it is crucial as a wholesaler to network with other investors who would be interested in your services so that you can get to know them before taking them to a property. It’s also more important to stay in control of the deal so you can quickly correct course if your investor looks like it won’t go through.
These are just two options that are attractive alternatives to actually moving houses and are two of the best options for new real estate entrepreneurs on a budget and who have more time than money.