There seems to be what I call an information fog around real estate investing. It’s not uncommon for an aspiring investor to spend more money learning real estate investing than he would for a master’s degree. Even after spending all that money, many investors never make a real estate transaction. Despite this, there are some people who earn a 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 property themselves. I left out ancillary investments like tax deeds or tax liens, lease options, options, real estate agents like commissioned agents, and other methods that don’t require you to actually buy property.
1. Selling Other People’s Property (SOPP) is a great way to start doing real estate business without having any money in the transactions. The first thing you need to do is build a buyer’s list using all the usual internet and network gathering methods. Then contact all the local wholesalers and ask to resell the properties they have for sale. They usually have no objection, but want you to increase your offer price properties. Finally, you will email your list to the 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 emailing someone else’s property and I suggest getting it 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 send to the property. Do not 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 in 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 wholesale buyers list. The investor will not have to have money to close the transaction if he simply assigns the contract to the ultimate buyer that he found. One guideline I use is; if the gain is less than $15,000, the investor must assign the contract. If the profit 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 profit. 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 wholesale to other investors learn very quickly that their buyer list is critical to their success. The more emails on your buyers 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 becomes 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 experience, but you can do it by interviewing local and national experts, posting these interviews on your website, or conducting online teleseminars. All of the national experts and some of the local experts will have products that are commissionable to you. You should be able to line up a lot of speakers who are willing to work with you and planning for an entire 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 whether to wholesale other investors’ properties, your own properties, or start an internet marketing program, the key to success is building a massive buyer’s list and continuing to add it as often as possible. It has never been truer to say, “Your power is on your list!”
