5 Ways to Invest in Real Estate with Little to No Money Out of Your Pocket

Top 5 Ways to Get Started in Real Estate Investing

The real estate market is rife with opportunities to flourish, which is why so many people are choosing to invest their money into purchasing properties. If you play it smart, you can invest in real estate with little to no money out of pocket. There are specific strategies you must follow to do this and I will explain in detail how to use each of them.

These strategies include:

  • Wholesaling
  • Bird-dogging
  • Homeowner Financing
  • Subject 2 Financing
  • Private-Lending

I do want to make mention that when using these strategies you should always keep the seller’s best interest in mind. After all, your relationship with the seller is key to a smooth transaction and may lead to referrals that will benefit you and your business. All five of these strategies can create win-win deals for both you and the seller, and that’s what we are ultimately in the business to do, create win-win solutions!

Here is a brief overview of each strategy. The “Who?”, is the different people involved in the deal. Sometimes deals can get complicated with all different kinds of parties involved so I want to simplify it for you as much as possible. 

Strategy 1: Bird-dogging

Who? Bird dog (You), the Investor, and the Homeowner
Bird dogging is finding houses that look abandoned, distressed or where the homeowner needs to leave quickly and then giving that information regarding the property to an investor. Pertinent information would be the address of the home, the owner’s name and a contact number for the owner, as well as any notes or comments about the house. Sometimes, its difficult getting all of this information so an address may be the only thing you can get.

The investor then negotiates with the homeowner and puts the house under contract. You, the bird dog, get a percentage of the profit on the deal after they renovate and sell the house or you can opt to sell your interest back at closing when they purchase the property for a set price (typically $1,000).

Strategy 2: Wholesaling 

Who?  You, the homeowner, and the Investor
In wholesaling, you find a lead, negotiate with the homeowner, put it under contract with the homeowner, then assign that contract to another investor. Essentially, the investor is purchasing the contract and your rights to the contract from you. The investor now purchases the house from the homeowner and pays you on the closing statement your assignment fee.

Typically you wholesale properties for $3,000 to $5,000 but it can be more. Most sellers don’t know where to find cash buyers or investors, or in some cases are not even aware that they can sell their home if it’s in a distressed situation. With wholesaling, you are finding a solution for the seller by matching them with a cash buyer who can close on the property and get them cash in their hand quickly.

Strategy 3: Homeowner Financing

Who? You, the homeowner, Private mortgage, and Note
Instead of taking out a bank loan to purchase a property, an alternative form of financing is owner financing. In this scenario, you would seek out a property, typically one that has a free and clear property (no mortgage) and purchase it from the homeowner who will hold a private mortgage and note much like a bank does when you get a loan. The homeowner agrees to finance it for you by holding a mortgage and a note. The mortgage secures the loan with collateral which is the house. For example, the note could outline an agreement that says you owe the homeowner $50,000 for the house and you will pay 5% interest with monthly payments of $300 per month at a fix interest rate for 30 years.

This is a great way for sellers to get a better return on their investment than just selling the home outright. If a seller sells their home for $100,000 with 6% realtor commission and 3% in closing costs, they can expect to net $91,000. However, if they hold a note for $100,000 at 5% interest on a 30-year amortization schedule, the principle and interest received will add up to be $193,255.78! Even better for the seller is that it is a completely hand off, passive investment, which means they just collect a check each month and do not have to work for it and no longer have any responsibility to the house.

Strategy 4: Subject 2 Financing

Who? You, the Homeowner, and bank mortgage
Subject 2 financing involves purchasing a house from a homeowner who has a bank mortgage on the property, by taking over the mortgage payments. You will purchase the house by taking over the mortgage payments but the mortgage will stay under the homeowner’s name.

If a seller needs to get out from under the house or can no longer afford the monthly mortgage payments then this strategy would benefit them. You immediately take over ownership and mortgage payments after you close so the homeowner can walk away with a peace of mind.

Strategy 5: Private Lending

Who? You, the Homeowner and Private Lender (private mortgage and note)
Acquiring private lending entails private individuals who are interested in investing their cash into real estate without having to do any work for that investment. This is a private individual who has money in a savings account, an IRA or another account and they want to get a better, safer and more profitable return through real estate investing. They, much like the homeowner financing strategy, will hold a private a mortgage and note on the property or can have an interest in the deal as an equity participant. You are given the cash to purchase the property, and in exchange for that cash, you pay them interest, cash flow, or equity, according to the agreement set forth in the note.

In Summary:

Each strategy offers a unique way of getting started in real estate investing without banging the buck. Even better, each strategy creates win-win solutions for all parties involved, including the homeowner, yourself and private lenders. The homeowner gets a quick sale and cash in their pocket, you get the house, and your lender gets to invest their cash into a safe and profitable deal. 

Need to Sell Your Home?

 While every caution has been taken to provide readers with the most accurate information and honest analysis, please use your discretion before taking any decisions based on the information in this article.  

KariBuysHouses.com makes no legal representations as to the accuracy, completeness, current-ness, suitability, or validity of any information on this site and will not be liable in any way whatsoever if you ever happen to suffer a loss, inconvenience, and/or damage because of or while making use of information in this blog.

I buy houses in Central Florida.  In Central Florida I buy houses in the Counties of Brevard County, Citrus County, Hardee County, Hernando County, Indian River County, Lake County, Marion County, Orange County, Osceola County, Polk County, Seminole County, Sumter County, and Volusia County.

In Brevard County, I buy houses in Cape Canavera, Cocoa, Cocoa Beach, Indialantic, Indian Harbour Beach, Malabar, Melbourne, Melbourne Beach, Palm Bay, Palm Shores, Rockledge, Satellite Beach, Titusville, West Melbourne.  In Citrus County I buy houses in Beverly Hills, Black Diamond, Citrus Hills, Citrus Springs, Crystal River, Floral City, Hernando, Homosassa Springs, Homosassa, Inverness, Lecanto, Pine Ridge, and Sugarmill Woods.   In Hardee County I buy houses in Bowling Green, Ona, Wauchul,, Sweetwater, and Zolfo Springs.

In Hardee County I buy houses in Brookridge, Brooksville, Hernando Beach, Hill ‘N Dale, Lake Lindsey, Masaryktown, Ridge Manor, Spring Hill, North Weeki Wachee, Pine Island, Ridge Manor, South Brooksville, Timber Pines, and Weeki Wachee Gardens. In Indian River County I buy houses in Fellsmere, Florida Ridge, Gifford, Indian River Shores, North Beach, Orchid, Roseland, Sebastian, Vero Beach, Vero Lake Estates, Wabasso Beach, West Vero Corridor, and Winter Beach.  In Lake County I buy houses in Altoona, Astatula, Astor, Bassville Park, Clermont, Eustis, Forest Hills, Fruitland Park, Grand Island, Groveland, Howey-In-The-Hills, Lady Lake, Leesburg, Mascotte, Minneola, Montverde, Mount Dora, Mount Plymouth, Okahumpka, Paisley, Sorrento, Tavares, Umatilla, and Yalaha.

In Marion County I buy houses in Anthony, Belleview, Citra, Dunnellon, Eastlake Weir, Fort McCoy, Hog Valley, Kerr City, Marion Oaks, Ocala, Ocklawaha, Orange Springs, Pedro, Reddick, Romeo, Salt Springs, Silver Springs Shores, Summerfield, and Weirsdale.  In Orange County I buy houses in Alafaya, Apopka, Bay Lake, Belle Isle, Bithlo, Christmas, Doctor Phillips, Eatonville, Edgewood, Fairway Shores, Goldenrod, Gotha, Hunter’s Creek, Lake Buena Vista, Lockhart, Maitland, Meadow Woods, Oakland, Ocoee, Orlando, Orlovista, Pine Castle, Pine Hills, Southchase, South Apopka, Taft, Tangerine, Union Park, Wedgefield,Williamsburg, Windermere, Winter Garden, Winter Park, and Zellwood.

In Osceola County I buy houses in Campbell, Celebration, Champions Gate, Deer Park, Four Corners, Harmony, Holopaw, Intercession City, Kenansville, Kissimmee, Narc oossee, Poinciana, Reunion, St. Cloud, and Yeehaw Junction.  In Polk County I buy houses in Auburndale, Babson Park, Bartow, Bowling Green, Bradely Junction, Brewster, Combee Settlement, Crooked Lake Park, Crystal Lake, Cypress Gardens, Davenport, Dundee, Eagle Lake, Fort Meade, Frostproof, Fussels Corner, Gibsonia, Green Pond, Haines City, Highland Park, Highlands City, Hillcrest Heights, Indian Lake Estates, Jan Phyl Village, Inwood, Kathleen, Lake Alfred, Lake Hamilton, Lake Wales, Lakeland, Lakeland Highlands, Mulberry, Polk City, Willow Oak, Winter Haven, Wahneta, and Waverley.

In Seminole County I by houses in Altamonte Springs, Casselberry, Forest City, Geneva, Goldenrod, Heathrow, Lake Mary, Lake Monroe, Longwood, Oviedo, Sanford, Wekiva Springs, and Winter Springs.  In Sumter County I buy houses Bushnell (County Seat), Center Hill, Coleman, Lake Panasoffkee, Sumterville, Oxford, The Villages, Webster, Wildwood.  In Volusia County I buy houses in Daytona Beach, Daytona Beach Shores, DeLand, DeBary, De Leon Springs, Deltona, Edgewater, Lake Helen, Orange City, Ormond Beach, Ormond-By-The-Sea, Holly Hill, New Smyrna Beach, Orange City, Osteen, Pierson, Port Orange, and Seville.