If you're just getting started on the ladder to real estate investing success and need money to expand, or if you're working without a safety net, with no regular pay-check, only by generating quick cash income can you expect to survive as an entrepreneur. Oh, you could get a job, but that's a desperate choice for a true entrepreneur.
Ways To Make Quick Cash
What are some of the ways to create a quick cash income with meager cash resources? Buying and selling has been the first rung on the ladder for millions of immigrants who, without language skills, have still been able to support themselves. Where many of them have missed the boat is in buying and selling trade merchandise rather than big-ticket items such as houses. But how can a person make quick money selling houses when it takes several months to arrange financing? The answer is pretty simple: Don't buy and sell houses, buy and sell Options on houses!
Buying & Selling Strategy
In order to make a profit selling anything, you either have to buy it low, or sell it high; or both. That pre-supposes that you know how to arrive at true fair market retail value, then to be able to negotiate discounts sufficiently below the market to be able to build a profit ‘spread' into your sale price and still be able to stay within retail market averages.
It's a lot easier to buy low than to sell high. Why? Because there is a lot more price information available to the public when they buy than when they sell. Look at your own house. Unless you get an appraisal, do you really know what it's worth in today's market? Even when you list it for sale, chances are that the real estate broker is going to try to get you to offer it at a quick sale price which may not represent top fair market retail value. Once you list it, it's likely that the price will never be adjusted upward to reflect rising market prices.
Working with Motivated Sellers
The difficulty in finding motivated sellers from whom to negotiate below-market contract purchase prices or terms is what makes Option contracts marketable. Let me test you. Suppose I'd contracted to buy a $100,000 house for $80,000 cash, to close in 6 months. What would you pay me for my recorded contract? Would you be willing to pay $10,000? $5,000? If I had the ability to get such a contract once a month, at $5,000 each, my annual income would exceed that of 75% of Americans.
Here's another illustration: What would you be willing to pay for the same house at full $100,000 retail, but with a $10,000 down payment and $750 per month fully amortized zero interest financing over the next 10 years? Think about it. The ten-year loan fully amortized with 120 payments of $750 per month compared to a 30-year loan at $639 per month. Your terms would save a buyer $140,000 over the loan term. Who wouldn't pay you $10,000 or so to get these terms?
Bargain Priced Purchase Contracts
Being able to offer bargain-priced purchase contracts broadens the market beyond mere consumers looking for residences to include speculators and investors too. The leverage inherent in an Option contract with the routinely small amount of cash needed to bind the seller, makes this an extremely low-risk proposition for the person of limited means.
Best of all, the entire spectrum of the real estate market is accessible to under-capitalized entrepreneurs. This not only includes houses that are too expensive to make feasible rentals, but all kinds and types of real estate from raw land to high-rise office commercial buildings.
One person I know was the only overnight guest in a small mountain lodge in the slow tourist season. The owners were only too happy to accept $100 against a purchase price of $360,000 on a 9 month all-cash purchase contract. She sold that contract for $25,000 within three weeks. Real Estate Investing Success!