Many people have all the knowledge and nerve to be investors, but they lack an equally important part: the money. Getting the cash together to get started or to expand in real estate can be very difficult, especially when you’re young. Once you overcome that startup hump, you’re in business, but what a hump it can be!
It doesn’t have to be insurmountable. If you turn your resourcefulness into high mode, you can find some clever ways to get money for your projects. Here are a few things to inspire you and get you in the right mindset.
However, you can get started in real estate with a little bit of money, you just have to learn how!
Check Your Own Pockets First!
Of course, nobody happens to have a few thousand dollars in their pockets that they forgot about. If you’re interested in investing, you have probably already been very attentive to personal finance, and you likely feel that you have sacrificed as much as you want to.
But there are always opportunities to cut costs without any change in your lifestyle. For example, revisit your cell phone service and see if you can change your service up to get free data or just to lower the price. See if a Lowvarates.com VA streamline refinance loan can lower your house payment. Join any of the endless coupon web sites and download money-saving apps. In short, find ways to live the same way you live now, just with a lower price tag.
Once you’ve freed up some money, you will have a better idea of how much you can commit to your property purchases. You could be in for a very nice surprise.
Ask About Other People’s Pockets
Another alternative is to take on investment partners. The first reservation many people have about this route is the perception that those with money to invest should be putting that money to work already. Why would they want to join you in a venture when they could be doing other things?
There are a couple of reasons. Pure magnanimity is one; sometimes investors like to take younger people under their wings and help them get started, often because someone did likewise for them. Others are so busy handling larger projects that they don’t want the daily management of something smaller.
Either way, they can be valuable partners to you. Because they have a vested interest in your success, they’ll give you the best advice they can. Not only does this make them a valuable source of money, it will also give you confidence that you are making the right moves. Even if you already have the money, it can be worth bringing in outside investors for just that reason!
We know how to make a snowball. You start with a little snow, then roll it through more snow and watch it grow. You can do the same with real estate. Buy a little, make some money, and roll it into more property.
This is the step to take once you have bought some properties and then re-sold or rented them. Whichever means is generating you some money, avoid the temptation to shove it under the mattress (or worse yet, blow it).
Instead, put that money right back to work for you. Buy more property! If you clear $50,000 on three different sales, you have the ability to purchase a property of $150,000 outright.
Having that freedom gives you lots of choices. It reduces your time stress because you aren’t in a month-by-month pickle to make a payment. You can then be more selective about renters, more thorough in renovations, and more realistic in asking prices than if you were trying to hurry and get money back out of the property.
Money leakage is the worst thing you can allow in a positive investment situation. A few bucks here and there on down payments or interest rates can add up quickly. If you can leverage a better means of financing your investments, you will be able to watch it grow more quickly and more securely.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.