10 ways to make money in real estate even if you are broke

Options - An option is a legal contract that gives you the right to buy a property at a contracted price. This little piece of paper allows you to market the property as an owner would. You have an equitable interest in the property. Nobody can tell you that you don’t. So you can buy a property at price X, and you sell it at some price X+$, and you get to keep anything greater than price X. Simple enough, and you need no cash or credit.

Lease Options – A lease option is similar to an option, but with a twist. In a lease-option there is a leasing component. You rent the property from price X, and that rental includes the ability to buy the property. You can make money, re-renting the property to someone else for more money. Take the profit and use that as your down payment to buy the property at the option price. It requires no money and zero credit.

Become a Real Estate Agent - Let me be clear, this is my least favorite way to make money in real estate, but it does require zero cash and no credit. You basically get paid to find property for people, and do the paperwork. This is entirely too much like a job for me. The upside is that you get paid to learn about real estate in your market. The downside is that you aren’t likely to make real wealth as a real estate agent.

Work For Equity - This technique only works on houses that need significant rehab. The good news is that every city has a pile of these houses. Here is how this works. You find someone with an abandoned house. You offer to fix it up, and split the profit with them. The problem is that you don’t have any money. Not really a problem, you find a handyman who can afford to buy materials, and offer to split your 50% of the first deal with him. Granted you only get 25% of the profits, but you are doing Zero % of the work, and you have no money in the deal.

Owner Financing - Property owners who can’t sell a property will sometimes resort to some form of owner financing. Basically the owner acts as a bank. You make payments to the owner and you get the property. Many of these sellers will accept a no down payment buyer, if they believe that you will pay them every month. These sellers are just frustrated and looking for a way out. You can help them and buy a property without a down payment or any credit. You can also turn around a sell that property for a profit at some later date. The implementation of the Dodd-Frank act of 2014 changes the rules on owner financing but those rule changes don’t affect the buyer as much as the seller.

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Bird Dogging - The term is a bit odd but it refers to using dogs to hunt. In the real estate investing world, bird dogs are people who get paid to find property that fits an investor’s criteria. I sometimes use bird dogs to find abandoned houses for me. The way this works is that an investor will offer a monetary bonus of some sort for supplying information or locating a certain type of property. I have seen bird dog fees as low as $10, and as high as $50,000 for locating a large commercial property. Don’t get confused, as a rookie, nobody will offer you big money to find anything. You can make some extra cash locating single family houses for local investors. All you need to do is a little networking to find the right investor.

Raise Private Money – just because you have no money, and bad credit doesn’t mean you can't buy houses, or any other property type. All you need to do is to find someone who will lend you money. People with self-directed IRA funds can loan money to buy real estate, as can high net worth individuals, and people with money in bank CD’s. All you need to do is to explain why your real estate purchase will make money, and how they will get their money back with interest, and you are in the game. You can make money with no cash or credit. I use a lot of private money in my real estate business. I am always on the lookout for my next private lender. It is just a matter of telling everyone that you meet what you do.

Build a Buyers List – Most people think of buyer’s lists as something that big wholesalers use, and that is true. Buyer’s lists can also be used by people with no money and no credit to make money in real estate. The way this works is that you need to start advertising yourself as a person who can find houses for buyers. Then once you have a list of buyers, you can market yourself to local property wholesalers, as a conduit for buyers. The deal that you propose is simple. They have a house for sale, you have a buyer, your buyer is worth X to them and you want a % of that X for arranging the deal. Basically you create a business out of thin air, where you become a matchmaker for buyers and sellers. You make money in the middle for brokering these deals. In the beginning you will either have buyers or sellers lined up, and then it just becomes a matter of using your relationship to one group to attract the other group.

Form a Joint Venture with a Property Owner – in this technique, you literally enter into a short term partnership with a property owner to sell their property for them. At a basic level, the property owner wants price X, and you agree to do all of the work to sell it for them, and you keep anything over price X.

Master Lease - A master lease is a lease that covers a multi-unit property. The bigger the property the more attractive this approach becomes. To use this technique correctly, you will need to find a property with a high vacancy rate. Then you offer to rent the entire property for an amount equal to that which the owner is currently receiving from the property. As you rent out additional units, the rental income from those units becomes your profit. Again, no money or credit needed.

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