The 3 Quickest Ways to Make Money Through Real Estate

The 3 Quickest Ways to Make Money Through Real Estate

Bird Dogging

Bird dogging might seem like a weird term to pop up in a post about real estate since it’s a hunting term. It actually refers to the concept of hunting dogs chasing birds and retrieving them after the hunter has shot them. Of course, we’re not talking about real dogs and birds, but it is a great analogy. Here, the hunting dogs are the savvy real estate investors, and the birds are the discounted or distressed real estate properties.

The intent of the investors is to find properties that are available for a discount. Usually these properties are old ones and need a substantial makeover before they are considered for reselling. These homes are hard sells, giving the owners a run for their money. The homeowners often have difficulty maintaining and keeping their properties because of mortgage difficulties or even foreclosures. Investors now simply buy these at a lower price and then start renovations and repairs. After that, they can sell the properties for a sizable profit.

Bird dogging is a quick way to make money for beginners who have very little or no money to invest in real estate. Why? Well, as a “bird dog,” you don’t need a lot of cash–or any at all for that matter–because you’re not even buying a property. Let see how that works.

A property scout is a person who searches properties for other investors. With bird dogging, he locates homes that have issues getting sold. He gets a decent commission on the property and then looks out for people who are interested in buying properties like this. By sharing the address and other details of the property to the investor, a bird dog earns his commission or fees. So, basically all this role requires the person to have is a lot of contacts. Of course, it helps to be a good sales person as well.

Don’t get me wrong, though, a bird dog’s job is tough. There are many out there in the market who produce the same results as the rest. A lot of them simply compile lists of properties for sale from the MLS (Multiple Listing Service) and give these to the investor. There’s not a lot of value to the client this way. To do well in this role, you need to search and come up with properties that are yet to be found by others and ensure that the lead turns into a sale.

When a deal is set, investors can compensate their bird dogs legally through an option method, a pay-per-address, or a pay-per-lead method. You can earn money quickly either by sharing property details before the deal closes or once the property is sold.

A few words of caution for the bird-dog-to-be: In many states it’s required that you have a license to operate as a bird dog. So, check out your state laws before getting into bird dogging. Always consult with your trusted attorney.

Wholesaling

Wholesaling is also a great way to start investing in real estate with little money.

It’s not a recipe for becoming rich quickly and easily, but you’ll get enough knowledge about real estate investing by getting into wholesaling. The concept is similar to flipping, except that the wholesaler doesn’t make any repairs before reselling a property. A wholesaler contracts a property with a property owner. He then markets this property to potential buyers. Once he finds a buyer, he assigns a contract to the buyer. The profit is the difference between the contracted price of the property owner and the amount paid by the buyer of the property.

Let’s understand the concept with an example: A property owner has a property that he wants to sell at $100,000. The wholesaler takes that house under contract for the same amount and assumes a repair cost of $30,000. He also assumes that the house will be finally sold for $190,000. He finds an eager buyer who is ready to buy the house for $120,000. So, now the buyer has a profitable project on his hands, and the wholesaler earns a nice $20,000. The best part is that the wholesaler earns this profit without ever owning the house. If the wholesaler isn’t able to find a suitable buyer within the contract period, he simply backs out of the contract. There’s no visible risk to the wholesaler, except for the time spent trying to find a buyer. Keep in mind, though, that backing out of contract will dampen your reputation locally so it’s something that you definitely want to avoid at any cost.

For some time now, wholesaling has stepped into the vision of lawmakers. Many wholesalers in Ohio are getting fined by their state governments for illegal practices concerning wholesaling. States like Washington and Florida consider wholesalers as “brokers.” And brokers need a license. The proponents of wholesaling, however, say that they do not sell the property; they simply sell the ownership of a real estate contract. Many states even consider marketing a property as brokering. So, when a wholesaler contracts a property from the owner and markets it, he’ll be considered as running a brokering business. Needless to say that not having a license here could get you into trouble.

The best way to pursue wholesaling is by getting a license and then practicing. If you have enough cash, you can buy the properties instead, and then wholesale/sell them. Once again, make sure to speak with your trusted attorney to get all if the ins and outs of what you can and can’t do.

Buy, Fix and Flip

Real estate flipping is by far the best way of earning money, but it is also the most expensive way among the three ways mentioned here. It involves the purchase of a discounted or old property, its renovation through repairs or adding infrastructure to it, and finally the resale of the property at a much higher price than what it was bought for. Obviously this method requires a good amount of cash, readily available, both during the purchasing of the property, as well as during the renovations to the property. But since you buy the property, you are not bound by any laws of brokerage, and so your property and all its transactions are considered fully legal without a license.

To be able to get into a flipping business, you should be familiar with the real estate market. The idea here is to buy cheap and to sell at a good profit. You should know what a low rate for a certain property is and what a market rate should be. You should also be aware of areas that offer a lot of properties perfect for flipping. In addition to all this, you should have an insight about which properties would be an easy sell and which would not be.

You can make the most money by flipping big properties. But keep in mind that some big properties are often high risk. The repair costs are huge and so are the holding costs. Once everything is finished, though, you will earn a lot more money. If big properties are not within your budget, flip a number of smaller properties and grow your profits gradually.

Many investors don’t have enough cash available to flip properties. That means they need to get the money elsewhere. In this case, it’s important to add the additional cost of a loan to the selling price in order to make a decent profit. The risk here is that the property becomes too expensive, and you’re stuck with the property. As most of you who follow my articles and videos should know by now, I’m not a big fan of loans anyway.

When you’re flipping a property, you also need a good team of people who help you get everything done. Do not underestimate the importance of a good and dependable team. You’ll need a reliable contractor who’ll carry out the repair work for you without too many issues. You’ll need a good attorney to prepare decent contracts for you. It’s a lot of work, but it certainly has its rewards.

Conclusion

Any real estate business requires you to have in depth knowledge about the market, as well as the time and money involved. You need to have the right contacts to get your work done well and on time. There are ways to make quick money in real estate, but you have to be cautious of all the laws surrounding the practices. Bird dogging and wholesaling are pretty good ways to make money and gain experience about the real estate business. At the end of the day, you want to make progress through learning and gaining experience. Going through the ranks with bird dogging and wholesaling and then gradually getting into flipping does exactly that. You really get to know the business; all you need to do is make sure you’re not doing anything illegal.

Investors: What are YOUR preferred methods of profiting from real estate quickly? Do you agree with my assessment?

Leave your comments below!

Interested in Finding out More? Reach out below

Shawn Ireland

Phone: 913-225-6231

Email: Ireland_Investments@yahoo.com

Address: 1415 Main St. #823, Grandview, MO 64030

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