There are a lot of people who made it big in real estate investing. Many of them in fact started out with nothing and just decided to earn money with one bold move. While there may be a few raised eyebrows with this statement, it is really true that anyone can earn profits without actually buying a property. You can make money with nothing down through effective leasing strategies and the right techniques.
Venturing into the real estate business for first timers can be absolutely scary as one always has the notion that a lot of risks are involved. With good leasing strategies however, you can still enter real estate investing without the need to make a big investment. Here’s one example:
You enter a lease agreement for 5 years with an option to renew for 2 additional 5 year periods. Suppose you lease the property for $80,000 per year and then find another tenant to rent it out for $100,000. You’ll earn a spread of $20,000 every year which is awesome. You’re actually able to earn money that’s enough to give you decent income each year with zero payment made.
You may think that it all sounds so simple and untrue. The truth is that, many real estate investors actually do this. A good lease is a very effective way to make money with nothing down and then gain equity and capital for the next real estate venture. Leasing and sub leasing are very common in the United States and have been done by many successful real estate investors.
Most investors try to negotiate a fixed lease agreement for a certain period of time. These investors then craft a sub lease contract that allows them to increase rental fees after; say, a two-year period. The excess money earned from the increased rental income can then be used for repair and maintenance expenses and many other unavoidable fees that may come up.
The leasing investment formula is basically to lease a property at a low price and then sublease this same property at a much higher cost. Calculate the costs that you need to make. These costs include taxes and probable repairs so you can come up with a reasonable rental fee for your tenant. Gross profits should be enough to cover your basic fees and then the rest is yours to keep.
What’s great about leasing a property is that you don’t actually own it. This brings forth reduced taxes as the rental income you get falls under the passive activity rental rules. Taxes can be sheltered by real estate losses and many other expenses while sub leasing the property. You get a fair share of profits with very little money down the drain.
If this can be done, then everyone would probably want to be the primary lessee and pay less rather than be the sub lessee and pay more. While this may be true, there are people who just need to rent out a house for a short period of time; thus, making them ineligible for fixed term leases. You offering convenience and a decent living space are also other ways to entice people to sub lease from you. Finding a nice house to live in isn’t easy and you are there to answer this need.
Some say it’s like shooting the moon but it really is possible to make money with nothing down. All it takes is a single step and the will to succeed. So set the sails and conquer your fears. Make a fortune in real estate investing without actually buying a house.