If you want to make some money in the field of real estate but the idea of house flipping seems too risky, this article will give you a couple of alternative ways to make money.
Some worry that house flipping is too much of a risk, why? You might fear the following scenarios, it could be that you can get into a deal where the renovation and repair costs turn out to be more than you expect. It may take longer to do those renovations and repairs than you thought. Then there is the actual sale, perhaps the property does not sell for the amount that you calculated it should. The property may also take a long time to sell.
These are normal concerns for any budding real estate entrepreneur. If that describes you, you might want to consider one of these house flipping alternatives to real estate as a way to get started with minimal risk. These house flipping alternatives can be an awesome way to get started in the business, to build your connections and to learn about the possibilities for the future.
Bird dog is a real estate investing term that refers to someone who spends their time trying to locate properties with substantial investment potential. Real estate investors may work with a network of bird dogs to increase the area over which they are looking for real estate deals. You could make money finding potentially good deals for other investors, acting as their eyes and ears in your local area.
When you find a good property, you can advise your investor. If it works out for your investor, then you will earn a fee. The fee is subject to the location that you are working in, how much of a profit the investor can make on the deal, and how much detail about the property and the deal that you are able to give to your investor. You can expect to earn fees of $1,000 or more for each lead that you can supply for good properties.
Why is birddogging a good option for you if you are just starting out in the field of real estate? Because it requires very little upfront investment and there is not much to lose except your time.
If you are already engaged in work that requires you to be out driving around or walking around neighborhoods then you can kill two birds with one stone by adding this side hustle.
Even if that is not the case, you can still set time aside to scope out neighborhoods, perhaps at weekends looking for possible great deals. So birddogging is a great part-time business to get you started in the industry.
Another option is wholesaling, not quite as risk-free as birddogging but potentially more lucrative. To explain very simply what wholesaling is, it is basically birddogging with an additional step. Once you find the property, you then negotiate with the seller and get the property under contract.
When you find a property that looks like the right deal that will enable you to make a healthy profit of at least a few thousand dollars you must now persuade the owner to sell the property to you and sign your contract. The way you go about this is the key step to secure the property to wholesale and make a profit.
The seller needs to know and be comfortable with several things including the fact that you aren’t actually buying the property yourself and that a third party will be the one buying it outright.
Once that step is complete you can then assign your contractual rights to an investor, you need an Assignment of Real Estate Purchase and Sale Agreement. This is a document that states that the new buyer is taking on your responsibilities, including buying the property according to the terms in the purchase and sale agreement.
Legally the buyer that you find must be made aware of the details in the original contract and the buyer must agree to all of the terms and conditions.
As a wholesaler, you are required to include a copy of the purchase and sale agreement with the Assignment of Real Estate Purchase and Sale Agreement.
The details of how you as the wholesaler get compensated for your work and efforts should also be included in the Assignment of Real Estate Purchase and Sale Agreement.
Most of the time wholesalers are paid a deposit when the Assignment of Real Estate Purchase and Sale Agreement is signed. The balance of the payment comes after the transaction is closed.
Make sure that each of these contracts is checked by a local attorney who is familiar with the local real estate laws.
Maybe you are wondering why an investor would want to have you in the middle, eating into his profits; are your services really needed?
The fact is that many investors prefer to have others do the leg work to find their deals. There is a lot of valuable work involved with finding a great property and many investors rely on wholesalers and birddogs to help bring them the deals and they are prepared to pay for that service.
Perhaps one of these two options will represent a viable alternative to house flipping and by choosing one of them you can get the ball rolling in your career as a real estate entrepreneur.