Here is a question from Johnell on Facebook:
“I have a real estate business Im trying to start, buying old homes and fixing them up to either sale or rent out. As you know its hard to start with little funds. So my question is where should I look for low cost property and/or help buying them?”
Johnell, thanks for your question.
Since you are starting with little funds it is important to maximize them and lower the risk. It is very easy to run out of money in a situation like that, and there is also a big risks in buying a property, investing that money in refurbishing it and then hope it will sell fast. You need to create a very dynamic process in which you are selling estate fast, so you can profit from that.
With limited funds, the buying-refurbishing model is not recommended. Your cash flow will be a high risk, and you will be probably depending on selling a couple of houses at the same time, but not many. If the properties you are investing in don’t sell, you’ll be in trouble.
So, how can you start a real estate business with little funds that will give you cash flowing with low risk? The option I see is ARBITRAGE.
Basically, you need to become a broker, and intermediary between the people that have no skills to sell their houses and the ones that lack the ability to make a good investment.
I know you get the idea but I will use an example. Years ago I did a pretty good start with Ebay arbritage. Today is forbidden, but the basic idea works pretty well. I took products in demand that were poorly promoted by sellers, republish them using marketing techniques and “resell” the same product for more money. Once the sale was made, I just bought the very same product form a seller with no marketing skills (and lower price) and make him send it directly to the buyer. I kept the difference and that was my profit.
The advantages are great:
* You don’t need to buy inventory.
* You don’t risk your own money.
* You can do this with several products at the same time.
Now, back to your business. The most important thing is to get the clients first. The funds you have available will be better invested if you build a list of buyers. Make a newsletter like “Tips To Buy a Great House for Less” and give it away in exchange for your prospects name and email. Use Aweber to build your list. Offer your newsletter or report on your website and deliver the tips. Then use any direct advertising to get prospect into your list. There you will have a list of potential buyers you can write to anytime, for $19 a month.
There are several places to find houses at low prices: Craiglist, USfreeads.com, eBay, etc. Invest in a good contract that will allow you to be the exclusive seller of the houses you choose. Find the way to refurbish them only ONCE THEY ARE SOLD. You will be paid for helping sell houses faster and help buyers get good deals.
If you have the buyer, you own the business. Get the prospect even if you don’t have what to sell, that’s all you need to start a business with very little investment.