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 involves taking old or run-down properties that won’t sell and fixing them up so they can be listed and sold effectively. Since buyers are even more choosy about the properties they’re interested in, sellers who need to sell fast and have a property that needs some work might be more inclined to accept a lower cash offer for their property, even if it’s less. of what 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 be taking on some risk. What if the repair costs are more than you expect? What if the repair takes longer than estimated? What if the property doesn’t sell for the price you thought it would? 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 changing 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 try the business or as an addition to your real estate business.
Exploring potential businesses like a real estate expert is one of the best ways to get started 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 look for a good property, they let the investor know and if it turns out to be a good deal, then the bird dog earns a fee. The amount earned depends on what market you are in, how good the property is, and how much information you can provide the investor. But it’s not uncommon to earn fees of around $1,000 or more for a track on a good property.
The reason why bird tracking is such an effective strategy for someone starting out is that it requires almost zero cost other than your time. This is also an especially good option if you have a job that requires you to be driving or walking through neighborhoods as part of your normal 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 deals. That makes bird hunting a great part-time business that anyone can start.
Wholesale is another alternative that is a step above being a bird dog, but comes with a bit of added 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 depending on the property, overall numbers, and what market you’re in, but it’s quite common in some markets to have wholesale fees between $2,000 and $20,000.
Why would another investor pay so much? To take advantage of! Many investors are simply too busy to find their own businesses. 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 land deals and reward them handsomely for doing so.
The downside to wholesale is that you actually have a property under contract, so you need to know that you have other investors waiting in the wings who are serious buyers with the ability to close. This 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 bringing a property to them. It’s also more important to stay in control of the deal so you can quickly correct course if it looks like your investor won’t go through.
These are just two options that are attractive alternatives to actually flipping homes and are two of the best options for new real estate entrepreneurs on a budget who have more time than money.