Real Estate Investing for Beginners 101: DON’T Wholesale
It’s no secret that the real estate market is a gold mine. Investors profit thousands, hundreds of thousands, and sometimes millions on the right deal. Sounds sweet right? While real estate investing can be a very lucrative career, it can also be a two edged sword, and it only takes one deal to turn a lucrative deal into one of your most expensive mistakes.
As a beginner in real estate investing, many jump to the idea that wholesaling is the perfect way to get started. Well lets just debunk that right now. NO. Wholesaling requires strong sales skills, resources for marketing, an established list of investors and buyers, attorneys, closing agents, an a lot of free time. Most beginners would crumble at the amount of skill, and energy it takes to wholesale. So instead, lets go over some great alternatives:
House hacking is when you purchase a property such as a house, duplex, or small multi unit building such as a quadplex, and you rent out the extra rooms or units. The rent generated from your tenants will often cover your mortgage, taxes, insurance and etc. This strategy allows you to learn the rental business, while essentially being paid to live in your home.
Master leasing means that you agree to lease a property from the owner. However, in your lease, you are allowed to sublease the property to your own hand-selected tenants. This arrangement can be beneficial because you get to learn the business while you manage your tenants. The rent you collect goes toward the agreed lease price, and you keep the profits.
Become a Leasing Agent:
A leasing agent finds tenants for landlords. As a leasing agent, you’ll generally earn a commission equal to half or one month of rent. This job requires a property or real estate license, and requires a lot of running around and talking on the phone, but can be done on a pert time basis with low overhead costs.
Become a Buyers Agent:
Much like how leasing agents search for tenants, buyers agents search for houses for buyers. Having a real estate license is strongly recommended, as you’ll have access to MLS, and the ability to earn referral commissions. If you’re a fast learner, this job can help you put some cash aside, all while building a list of loyal buyers.
Live in Your Flip:
This option is like house flipping with training-wheels. You find a property that can be purchased well below it’s full potential value. Execute the needed upgrades either yourself, or frugally hire quality contractors, and in two years the home can be sold for a profit. Why two years? Once you’ve lived in your home for over two years, your profit on the sale can be collected tax free!
Become a Project Manager:
This is for those of you who like to get your hands dirty. A project manager is someone who oversees all of the different subcontractors on a job, ensuring the entire project runs smoothly. This experience helps you learn about the cost of labor and materials, the flow of a renovation, and the tips and tricks it takes to manage a project, all while staying on, or under budget; all valuable assets in flipping homes.
Become a Bird Dog:
A real estate bird dog is much like a wholesaler, only he or she does not put properties under contract. Instead a bird dog presents potential deals, and brings them to an experienced investor, and earns referral commission once the property is purchased.