Money is a huge barrier stopping people from investing in real estate. So many people would love to know how to get their foot in the door. But it costs money to buy a property. There are three ways that you can get capital (money) needed to start building your wealth.
The first way is by earning more income or saving more of your income. A lot of people have side hustles apart from their regular jobs, and I think a great strategy, is to use that extra money for investing.
Many just aren't that good at saving their money, and not that good at budgeting. The first way that you can earn the capital is by coming up with really good strong plan of either earning more income and investing it, or saving a high percentage of your income and using that towards your investments.
I know that's not necessarily the sexiest way to earn capital to start investing, but it is a strategy nonetheless and it's something that is in your control.
The second way that you can get capital to start investing is through other people's money.
Exactly how to use other people's money is a vast topic, but one example of this is using a partner.
Someone that has the money to put into a deal and you can contribute other skills or assets like your time.
Your partner could be a family member or a friend that doesn't want put a lot of time into investment, but they're willing to put up the money. You could also get a vendor take back mortgage, where you actually get money from the seller and pay them a monthly payment like a mortgage.
Using other people’s money creatively is a great way to acquire capital to invest in your next investment property.
The third way is to use your equity building skills and specific strategies in order to create equity and building out your portfolio in that way. One of the skills that you may have is your hard work, or your skills at being a handyman or a contractor. Or knowing somebody you can partner up with that has those skills.
For an example, there's something called the BRRR strategy which is buy, rehab, rent, refinance, and repeat. Essentially what you're doing is you can get a short term investor or hard money lender who funds the rehab, and loans you the money short term. Then once your property's fixed up you have the bank, or more of a traditional lender come in, appraise the property, , then you can get a traditional mortgage at that point and take out any extra equity and do it again..and again and again.
This is just one strategy that you can use, but in real estate like I've said before, there are so many different ways to make money. There are so many different strategies depending on, what your goals are, how much time you have, what your timeline is, and what you're willing to put into it.
These are three ways that people use and come with up capital in order to start building their equity and growing their wealth.