You bet there is! Wholesaling, taking over properties subject to, and options are great ways for new investors or those with limited funds to break into real estate with little to zero money out of pocket. Wholesaling is about as simple as it gets. All you have to do is find a property that is well below value, get it under contract and assign the contract to another investor who is also going to make money.
You might have to come out of pocket earnest money and option money but this can often be limited as well (Usually $500-$1000 for earnest and $100 for option money). I’ve seen wholesale deals make new investors from $1000 up to $100,000 depending on the size of the deal, but where ever your commission falls, part of something is always better than 100% of nothing.
Subject to’s are another way to make money. You can either make a wholesale fee or stay in the deal and make cash flow or part of the equity. I recommend you find investors that might have a little bit of money sitting in an IRA and partner with them so that they make up any back payments. I just guided one investor who just partnered with another investor to take down a property that the home owner’s deeded over to them.
The 2nd investor provided the 3 months in back payments from her self directed IRA and they are going to rent it, or sell it with owner financing and split the profit 50/50. That should be monthly cash flow of around $200 a month to each and several thousand in cash from a down payment on the wrap! This is usually know as taking a property over “subject to” existing financing staying in place. Basically, you end up owning a property where the mortgage of the previous owner stays in place.
You continue to make the monthly payments or find a renter or someone to buy the property with owner financing or a lease option tenant where you can get a nice down payment and monthly cashflow. You usually have to come out of pocket to make up back payments, but sometimes in divorce or probate situations, you can often step into a subject to with no money.
My buddy, Jason Schubert, just picked up a nice sub to for $2. He could have picked it up for $1, but he didn’t have four quarters to pay the divorcing husband and ex wife $50 cents each so he upped his price to a dollar each. What a nice guy! He’s picking up the property with $40,000 in equity and he’s already flipped it to a end buyer for $18,000 in down payment. That’s a pretty good return for $2 bucks!
Options are another way to sell property with little money out of pocket ($100) or non-exclusive options ($10) are another great way to negotiate a price with the seller, and sell the property above what ever your option price is. All an option is that you have a predetermined price for the property and have a speciifc amount of time to perform (could be week, months, or years). This is in effect a contract except the seller has the right often to accept a higher offer on non-exclusive options as you aren’t tying the property up exclusively. I once tied up over $6 million dollars in San Diego Beachfront Condos for $10 on a non-exclusive option agreement. That was a fun deal!
As you can see, if you utilize these effective options to start your real estate investment career, you can often compile a nice chunk or pile of cash doing options, sub to’s, and wholesale deals that will allow you to make the jump into rehabbing or more monetary intesive investing. What ever you chose to do, go out there and find you some deals! The more you network and talk to other investors, the more deals will wind up in your lap! Happy Investing!