You can start a career in real estate while you’re still working a full-time job, even if you aren’t currently making big bucks. While it doesn’t require a college education, it does require careful research, planning, and sometimes sacrifice.
The real estate market favors those who are resourceful, so always be on the lookout for things like reliable repair-people, affordable marketing services, and freebies to help you get the job done. Here are some other ways to get your real estate business started with limited capital.
Starting with no capital
There are a few different activities that can enable you to turn a profit over time: the most widely known is called “flipping”, but this is rarely as easy or profitable as some television shows would have you believe. Many investors take a more patient approach, keeping property over two years to reduce tax liabilities and earn more equity. This means they’ll become landlords in addition to renovators, which can be a steady and reliable way to accomplish your long-term goals.
One of the hardest things to overcome is the lack of initial funds for a down-payment, but if you have the desire to become a real estate investor and are willing to live in a home that might not be your dream home at first, you can get to work. One way is by purchasing a multi-unit (a single building split into two to four units) using a state housing program.
State housing programs offer low down-payment options, are typically offered in metro areas, have provisions for borrowing money for repairs, and are specially designed for buyers with a lower average income and credit score. Veterans can use a special program called a VA loan, which has a no down-payment option and other benefits as well. In rural areas, USDA RD loans offer buyers an affordable route to homeownership as well.
Sweat equity and patience
With the rise of YouTube, a person can get a crash-course on how to do almost anything, but it’s important to know when to call in a professional. Building codes must be followed and some activities, such as electrical or HVAC work must be performed by a licensed professional. Other activities, such as tile work, flooring, painting, and deck repair can be completed by people with no prior experience. Don’t worry if you don’t have skills at first; they come with practice, research, and learning from mistakes.
In the beginning, you will likely have to prioritize repairs on a tight budget, but don’t forget that time can work in your favor. Over time, your property values may rise, giving you the equity you’ll need to pull cash out for repairs down the road, as long as you maintain the property adequately in the meantime.
Marketing and screening tenants
Taking the time and diligence to find dependable tenants can take as much elbow grease as re-caulking a bathroom, but it’s a top priority. While you might think listing your rental on Craigslist or in the paper is the easiest way to go, putting your rental information in the right places is one of the best ways to get reliable tenants.
The first step is presentation: stage your rental and take high-quality photos, then work with a printer to create some branded materials like brochures and even custom pocket folders so you have quality handouts for your property. You can bring these to nearby businesses who might have employees looking to move closer to their place of employment, especially hospitals, restaurants, and retail stores. Highlight the benefits and conveniences of both your property and your process with things like a free tenant screening or maybe off-street parking, for example.
Follow all Fair Housing laws but screen tenants carefully to reduce your potential liabilities. Though you may experience a slow-down at your day job, people will always need places to live, so investing in property and becoming a landlord is a virtually recession-proof career that can give you long-term income stability.