by Theresa Bradley-Banta
Do you feel as though you have to invest your own money in a real estate deal in order to ask your friends and family to chip in as investors?
It’s a common worry for many of my mentoring clients.
I mean seriously, how can you justify asking everyone else to invest in a property you’ve found when you don’t personally have two investment dimes to rub together?
Let’s put your mind at ease now…
The Real Estate Investing Dream
Do you know there are thousands of people who share the real estate investing dream? They just don’t have the opportunity or know-how to pursue it.
You however have probably invested time—and money—getting the education to invest wisely. With that education you’re able to recognize solid real estate investment opportunities.
The very opportunities your friends and family don’t know about.
And you’re in a place to share.
The Hardest Job of Any Real Estate Investor
Discovering a great real estate investment property, in the right market, is the hardest first step for most prospective investors. It’s why so many people only dream about investing in real estate.
By finding a great investment property you’ve solved most interested investor’s dilemma.
You’ve earned your weight in gold!
In addition to finding great deals, there are absolutely dozens of ways you can contribute without actually writing a check.
- Contribute Capital: Instead of investing cash why not use your good credit (used to get financing), collateral (assets or property to secure a loan) or self-directed IRA funds to name but a few?
- Make an Entrepreneurial Contribution: What if you find other investors with capital? Or source lender financing? Both are extremely valuable contributions. Or you might be a CPA who will handle the books and taxes or the lawyer who drafts the partnership agreement.
- Provide Labor or Specific Skill Sets: Do you have contracting or property rehabilitation skills? Experience with property management?
Here are 30 ways to invest in real estate without using your own money — and still bring value to a real estate partnership.
- The top of the list? Finding the real estate investment property!
- Find other investment partners with capital.
- Contribute collateral or credit.
- Create the investment memorandum for prospective investors.
- Prepare the loan application documents and financials.
- Prepare financial analysis of the investment property at acquisition.
- Prepare pro forma operating budgets and projections.
- Research potential investment markets and submarkets to include: sold comps (a list of recent property sales); rent comps (a list of competing property rental price points); renter demographics and competition.
- Provide continuing rental market research during ownership period.
- Strategize on increasing property Net Operating Income/NOI (increase income and lower expenses).
- Strategize on making the investment profitable, including exit strategies.
- Plan investment exit strategies like: property sale projections; refinance objectives; or conversion to other use (such as conversion to condos).
- Handle bookkeeping, accounts payable, and rent collections.
- Lease and pre-lease rental units.
- Create marketing materials for potential renters.
- Form and manage the investment entity.
- Prepare the entity Operating Agreement.
- Renovate and rehab common areas and/or individual rental units.
- Improve the property and address deferred maintenance.
- Evaluate current service providers and vendors (trash removal, property insurance, pest control, landscaping, etc.) and shop for better rates/service.
- Prepare year-end tax reports.
- Establish multiple exit strategies such as: outright sale of property; refinance; or 1031 Exchange (tax deferred exchange into a like property).
- Broker the real estate transaction (purchase and/or sale).
- Market the property for sale.
- Manage legal issues such as collections and evictions.
- Manage the property.
- Oversee property maintenance.
- Oversee contractors and property inspectors.
- Manage tenant relations and set up policies and rules.
- Operate the property. This includes common area maintenance items like landscaping, painting, and cleaning. (Download this checklist: Multifamily Property Checklist: An Owner’s Guide for Operating Apartment Buildings).
Whew! It’s a long list. Do you see how successful real estate investments need time and teamwork? And specific skill sets and talent?
All of the services listed above are services the partnership pays for. Somebody’s got to do the work. Why not you?
There are literally dozens of ways to invest in real estate without using your own money! Non-monetary contributions that allow you to feel great about your role in the success of the investment.