Building a consistent flow of income in the real estate business takes time. If you buy a fix and flip property today, it can be several months before you cash out and enjoy a profit. During this time, you need to find ways to generate income and keep your financial house afloat. Fortunately, real estate affords you with several different ways to do just that.
When most new investors think of real estate they immediately think of house flips or buy and hold rentals. While these are both tremendous niches, they are just two of the many ways you can build your business and make money. As is the case with any type of investing, the more options you have of generating income, the fewer financial dips you will go through. Here are five ways to generate money while waiting to close your first, or next, deal.
- Real Estate Agent: There are several jobs, or careers, you can find that are attached to investing. The most obvious is to obtain your real estate license. This may be easier said than done, but it allows you the highest upside. For starters, you may be able to save, or make, money on properties you are directly involved with. You also know more people than you think that have a need for a real estate agent. If you can list or represent a buyer for just one property every few months, it may be enough to bridge the gap until you close your next deal. It will also help you gain access to the MLS, build networking contacts and learn the local area. Getting licensed is not without some hurdles and some upfront costs and fees. However, the upside and potential for income are often worth the outlay.
- Wholesale: Successful real estate investing requires you to be engaged in the business at all times. You never know where, or when, your next deal will come from. There will be times when you will be presented with a deal that, for a variety of reasons, you cannot do. Instead of simply passing on these deals you should find a way to earn on them. Wholesaling is a great way to make money on these types of deals. With wholesaling you seek out motivated sellers and present them with an offer to sell. Once you have a contract you can assign that contract to an end investor and step out of the way. For your efforts you will make a small fee and if the spread is large enough, even a piece of the profits. It can initially be disheartening that you can’t fund the deal yourself, but wholesaling allows you to make money when you normally wouldn’t. Wholesaling can be a lot of work but is also risk free and allows you to earn a fee and move on to the next deal without having to wait for the property to sell.
- Investor Associate: The best way to learn the business is by being around it. A way of learning the ropes, and making some money, is to become an investors associate. There are many established investors who need help with their current workload. You can find these investors at local networking meetings or monthly investment clubs. During your conversation simply ask them if they need any help with property due diligence, taking pictures of properties or any other real estate related tasks. The odds are they would love to get some of the busy work off their plates and would gladly pay someone to do it. You won’t break the bank with the pay, but you will make some money, learn the ropes and make some great contacts.
- Property Manager Help: The same concept should be applied with local property managers. Busy property managers that handle multiple properties often have a full work load. They may turn away new business because they don’t think they can handle it. They often aren’t actively looking for help but would gladly take it. Property manager contacts are found in all the same way as local investors. However, you can also reach out to your real estate agent, mortgage broker and attorney contacts to find property managers. You will have to handle a variety of tasks from going to town hall to setting up maintenance appointments. You may do a rent collection or drive to the rental to assess any damage. If you have any desire to own a rental property, this can be a great way to learn the ropes while collecting a small pay as well.
- Lead Generation: If you have deals you can find investors who want them. It is always a good idea to establish solid lead generation contacts. Using social media is a slam dunk, but there are also other ways to find deals. You can use an old school method of driving for dollars. Follow up on any abandoned properties you see and get to the bottom of the situation. Often properties with overgrown shrubs or yards littered with debris can be a sign that the owner wants to get rid of the property. With a simple tax search and brief follow up you can get in touch with the owner and find out what the story is. If the deal is juicy enough, you can pass it off to an end investor and earn money on it.
With a little hustle you can find ways to bring money in while waiting for your next deal. In addition to these five tips there are several other ways to generate revenue and keep the income cycle moving.