Getting Started Is The Hardest Part!

[Stephen Marshall]

Most people that consider investing in real estate never buy a single property.  The biggest reason for this lack of action is that most people don't have the time to source deals, rehab, rent and manage a rental portfolio or flip a house.  This lack of time is very understandable with the demands of work and family not leaving enough hours in the day to take on a part-time job in the real estate industry.  Don't let this lack of time stop you!

Build a network of people that can help you achieve your real estate goals.  If you have seed money (cash, self-directed retirement funds, etc.), good credit and the ability to conduct detailed due diligence on investment opportunities, you can build a team that will help you.  Here are four ways you can invest even if you are a busy professional...

1.  Work with a reputable "Turnkey" provider

"Turnkey" companies source distressed properties, rehab, hire professional management, load the property with a qualified tenant and then sell the property to a passive cash flow investor.  This approach is the easiest path to building a real estate portfolio, but you will pay a premium for the service.  Make sure the numbers work for your objectives and check out the company you are working with before giving them any money.

When you buy a "Turnkey" property, plan to hold for at least five years.  These aren't flip opportunities and you will likely need to pay down debt with cash flow and experience some appreciation before exiting the investment.

I have worked as a wholesaler with several reputable "Turnkey" companies in the Memphis market.  We've worked with Memphis Invest, Buy Memphis Now, Mid South Home Buyers and Memphis Cash Flow. 

2.  Work directly with a Wholesaler

You've probably seen the "bandit" signs on side of the road that say "we buy houses for cash."  These advertisers are likely real estate wholesalers.  Wholesalers spend their time and money seeking distressed sellers that are looking to rid themselves of a property without going through the traditional real estate sales process.  These properties are placed under contract or purchased at significantly discounted prices and can be assigned or sold to another investor.

My company is a franchisee of HomeVestors, the "we buy ugly houses" company.  We wholesale more than half of the houses we buy to other investors that actually rehab, rent or sell the property.  Buying directly from a wholesaler is the lowest cost approach, but you will need to source the rehab, management and all of the details in between.  If you work with the right wholesaler, they can refer you to people that can help with repairs, management, etc.

3.  Work with a Real Estate Agent or Broker

This is how i got started 10 years ago. Find an agent that specializes in foreclosures, bank owned or understands the HUD bidding process for investors. Using an agent is the most common way for time constrained, new investors to source property. Buying houses this way won't be the cheapest approach, but having an agent help with the issues that come up before closing can be a big time saver. Also, they may be able to help with property management and refer contractors.

4.  Work with an experienced partner that has time and know how

Find a joint venture partner that has time to source deals, rehab and handle the management process.  You may put up the money or down payment and they can do all of the work.  Remember to get everything in writing so there are no misunderstandings at a later date.  Another good idea when working with a partner is to develop an exit plan(s) in advance.  You may also consider sitting down with a lawyer to discuss the partnership.

Use one or more of these suggestions and you'll run out of excuses for not building your real estate investment portfolio.

About the author:   Steve Marshall is a franchisee of HomeVestors in the Memphis area.  His email address is [email protected]