The most common question I get is, “How do I make cash right now in real estate? Oh, and by the way, I have no money to put down and my credit is horrible!”
Ok, not impossible, but it will take hard work, dedication, and learning a few tricks I have up my sleeve.
Here are 7 creative techniques for generating cash quickly without starting from much.
1. The Wholesale Fixer
Summary: Find a fixer property that needs a lot of work, but that is priced accordingly. Get it under contract for 70% of ARV minus repairs, then flip to another investor
Where to Find: MLS, Probates, Free and Clear Owners
What to Watch Out For: Banks won’t let you assign their purchase contract.
2. Wholesale Rental
Summary: Find a property that would make a good rental, and flip to another landlord. Usually, a “starter” home that’s on the cheaper side and doesn’t need much more than carpet and paint to make it a fine rental property.
Where to Find: MLS, other landlords
What to Watch Out For: Sewer line, roof or a structural problem will push repair costs too high to make it worthwhile for a rental.
3. Sandwich Lease/Option
Summary: Lease a property from the owner with an option to buy, then sublease to a tenant, giving him an option to buy for a higher price. When a tenant is ready to buy from you, exercise your option to buy from the seller, and double-close the deal to the tenant.
Where to Find: Properties for rent, listed as “For sale or rent”.
#1 Thing to Watch Out For: Don’t make payments directly to the seller and trust him to make it to his bank. Instead, use a third-party escrow company to service payments.
4. Subject to, Lease/Option
Summary: Have seller who is highly motivated and little equity deed his property to you, subject to the existing mortgage. Then, lease to a tenant with an option to buy. More favorable than #3, because if you have title to the property for more than 12 months before tenant buys, the profit is a long-term capital gain, which means lower tax rate.
Where to Find: Properties in default or in foreclosure. May require you to make up some back payments, though.
What to Watch Out For: Seller has undisclosed liens on the property. Do a title search before proceeding.
5. Wrap/Rewrap
Summary: Buy on a wraparound installment land contract, mirroring the seller’s loan balance and payment terms. Then, resell on a wraparound installment land contract, marking up the price and interest rate.
Where to Find: FSBO seller who has very little equity or advertising “for sale or rent”.
What to Watch Out For: Don’t make payments directly to the seller and trust him to make it to his bank. Instead, use a third-party escrow company to service payments.
6. Flip a Mobile Home
Summary: Buy one cheap, fix it up, sell for cash. Works best on older homes that are cheap, because few people have the cash to buy a $40k mobile, and few banks are lending in this arena.
Where to Find: Put fliers out in mobile home parks
#1 Thing to Watch Out For: Your buyer may not qualify for the mobile home park lease!
7. Buy, Wrap and Sell Note on Mobile
Summary: Same as above, except sell on terms at a much higher price, take back a note. Then, sell the note for a discount for cash to another investor.
Where to Find: Put fliers out in mobile home parks
What to Watch Out For: Your buyer may not qualify for the mobile home park lease!
Here is a short video to help you out:
https://youtu.be/XXsGYUeEHBg
