How would you like to own an investment property that is 75% financed and the balance of the money (25% equity) is given to you?
Sound too good to be true?
Let me explain how you can manage to do this.
Once you have had some success in building a real estate portfolio (even with just one property) your friends and fellow investors will then begin to see that you are becoming very knowledgeable and perhaps even begin viewing you as an expert.
This doesn’t happen overnight but once people start to view you this way they then begin to show more interest and eventually want a piece of the action.
This is when you can become more creative.
Build Your Investor Network
You need to be continuously networking in order to build a base of potential investors. While you are building this base of investors you are also looking for exceptional real estate deals.
The ideal opportunity would be to find a property 10 – 20% below market value, with below market rents and in need of minor repairs.
As the real estate expert you will need to get this property under contract and present it to a group of your investors.
If you have four willing investors then they will each submit 25% of the required down payment and closing costs.
For this, each investor will receive a 20% equity share of the property and you will retain the final 20% equity share as compensation for finding and putting the deal together.
Now if you do 5 deals similar to this you will end up with 20% of five different deals which is the equivalent to 100% of one deal. This is not a new idea! Ken McElroy talks about this very strategy in his real estate CD.
Easiest Way To Find Investors
So what is holding you back, assuming you have the experience? For most people it is very painful to ask others for money, especially large groups of professionals.
What I have learned over the years is that…
You don’t ask for money,
As people become educated by you they will see you as an experienced investor and they will ask to invest with you.
A very simple and safe way to get started with this concept of educating others is to simply play the game “Cash Flow 101”.
This game was created by Robert Kiyosaki, the author of “Rich Dad Poor Dad”, and it is a fun board game that teaches people the value of investing in real estate.
At one time I was hosting the game in my home every month and as a result of this I attracted two money partners into my business.
I have also taken every opportunity presented to me to speak with people one on one or to larger groups about the value of investing in real estate.
I have no expectations for compensation, however I believe that the more people I speak with and educate the more people I will attract as investors and the more I will be considered as an expert.
Expand Your Mind
To be viewed as an expert you need more than confidence, you also need knowledge.
People have the perception that real estate investing is high risk and for some investors this may be true. The reason it may be high risk is because people are investing with little or no knowledge relating to investing in real estate.
The Cash Flow game is one method and another method is to actually teach people about the profit centres in real estate compared to other investments.
For example when you invest in the stock market you are hoping for appreciation (capital gain).
But when you invest in real estate you are actually able to experience 6 different profit centres:
- Cash flow
- Principal pay down
- Leverage and
- Instant equity
When potential investors learn of these profit centres they begin to understand the benefits and the true risk plus you will be considered even more as an educated investor.
As a result of my educating others, I am currently working with a small group of investors who will be providing 100% of the money required to purchase an apartment building in return for 80% of the equity in the property.
I will receive a commission as a real estate agent when I represent the group as the buyer PLUS I will retain 20% equity in the property and my return on my investment will be infinite.
This is just one example of how you can creatively use OPM – other people’s money.
If you want to open other people’s minds to invest with you, then you first need to open your own mind to the many different ideas out there.
Start out by reading books, attending seminars, finding a mentor and acquiring the necessary experience.
What is the most creative deal you’ve ever done?
- How Much Is An Apartment Building Really Worth? - August 18, 2017
- 2 Things That Stop You From Investing In Real Estate - January 24, 2017
- How To Make An Offer On Property And Avoid Competing Bids - September 28, 2016