Which came first, the chicken or the egg? Well, there is a similar conundrum in real estate investing. Which one is more important: finding the deal or finding the money?
Some investors will say that the deal is more important and others will say that the money is more important. Many investors feel that in order to be successful, they have to possess the skills to do both—the deal and the money—really well. Luckily for them, that is a myth and not the truth. In order to be successful in real estate investing, they only have to do one of two things really well. They either need to be really good at:
- Finding the deal or
- Finding the money
If you have a great deal, you can find people that have money because they will be attracted to the opportunity. If you can find money, then you can also use the money to get the deals coming to you. If people know that you have the means to put together a deal, they will bring opportunities to you, so it works both ways. If you have either the deal or the money, the other half of what is needed will be attracted like a moth to a flame.
Let’s review each of these aspects.
Finding the Deal
To be successful at finding the deal, you will want to put several strategies at work simultaneously to help you consistently locate great investment properties.
First of all, find a real estate agent that can supply you with potential opportunities. Let the agent know what kinds of investments you are looking for (rental properties, rehab properties, commercial, etc.) so they know what types of deals to bring to you. If you have a deal that is profitable, the money will come to the deal because it is an opportunity for another investor to make a profit.
When you are working with an agent, you will likely submit many offers or letters of intent to secure a deal. You need to know that it is part of the process so that you can set the right expectation with the agent.
Another way to get consistent deals is through advertising. Motivated sellers are always looking for a way to sell their property. If they see a sign, a billboard, a flyer in the mail, a letter, or are referred by someone, you can solve their problem and score a great deal in the process.
One of the keys to successful advertising is to be consistent. Many sellers do not respond the first time they see an ad because it is a timing issue. If a seller is losing a home due to foreclosure, they may be in denial for quite some time before they realize that they need help. There are similar circumstances with probate properties, job transfers, divorces and so on. The important part is that you never know when the timing is right. In order to get the best results, it is important to plan on having an advertising budget each month and stick to it.
Monitor the results of your advertising. When people call you, ask them how they found out about you. This is one of the easiest ways to gauge what is working and what is not. That also helps you identify where you should spend your money in the future as you advertise.
If you have the money but need the deal, another option is to work with wholesalers in the area. A wholesaler will constantly find deals and assign the contracts to other investors because they do not have the money to put the entire deal together. If you find a good wholesaler, this can be a constant source of potential deals and they are doing all of the leg work for you.
Let the wholesaler know what you are looking for in a deal and what you have the ability to fund. With that kind of information, they can use their resources to find the right scenario for you and it takes a lot of the burden off of you. This is another case of how people who have money set the rules and people do their best to match those rules.
With this combination of strategies, finding potential investments will be much easier and it will give you a place to put the money that you have located.
Finding the Money
What happens if you find great deals but you do not have the money? Well, use these strategies to help you with the other half of the puzzle.
If you cannot find the money, the simplest solution is to assign the contract as a wholesaler. This means that you sell your contract to another buyer (usually another investor) and they step in and use their resources to fund the deal. You would make an assignment fee for putting the deal together, and you are free to move on to the next deal.
Wholesaling is a common way for many investors to get started as it is a way for them to begin investing without having the capital resources to do it.
Another common method is for people to use creative financing as an option for putting the deal together. This includes lease options, seller financing, and many other options. The whole point here is that you can structure an alternate method for the deal to work where the money needed will be little or nothing at all. With these strategies, you can potentially bypass the need for having funding.
You can also use partners for funding a deal. The whole point is that you put up the deal, they put up the money, and you split the profits. Now, there are specific rules you must comply with when it comes to raising capital from others and they are too detailed to include within this article. However, the principle is that you can always raise the money. No one said that the money had to come from your bank account.
When you privately fund deals like this using other people’s money, you remove a lot of the barriers and limitations that many investors feel that they have. There are many people that have money that would like a better return than what they can find through traditional sources. If you can provide them with an opportunity that they cannot get elsewhere and they believe in your ability to deliver, then this can be a viable opportunity.
The purpose of this article is to show you that there are many roads that lead to success as a real estate investor. The training offered by Rich Dad Education will show you how to use each of these various methods to achieve success. If there is a specific path that interests you, enroll in the appropriate class and get all of the necessary information.
You can use your personality, your skill set, and your talents to be successful as a real estate investor. Get really good at finding either the deal or finding the money. When you have one half of the puzzle solved, the other half tends to work itself out.