In real estate, there is no roadmap to make money and become successful. And you do not have a cap on your potential earnings because there is an abundance of ways to make money and double your returns in a relatively short time frame. Again, do not expect to become rich overnight, it will take some time for you to get the gist of things and to choose an investment strategy that is aligned with your long term goals and financial resources. Whether it is the the conventional bank loan or financing via a hard loan, you will arrive at the same outcome, but if you are smart, you will choose investments that will reap you high returns in the quickest way possible. The profits you earn from real estate investing will help you grow your potential earnings and business to give you the financial stability over the long haul.
The Bigger the Risk, the Bigger the Reward
Investors following a traditional path will surely reap good returns, but if they go outside the box and take greater risks, investors will reap greater financial rewards. The less risk averse you are as an investor, the greater the rewards. The goal in investing is not to avoid risk; it’s to be smart about the risks you take. Smart investors take risks in investment opportunities they understand and have a degree of control over. Smart real estate investors never make decisions on a whim; they study their investments and do their due diligence before closing in on any deal.
With this said, do not expect to succeed in creative real estate investing if you do not possess the right knowledge and expertise on the matter. This applies to anything in life, and real estate investing is no exception. Become a real estate expert through trial and error, reading real estate blogs, keeping up with real time news, and seeking professional advice as this will set you apart from other investors who are just trying to make it.
Creative Real Estate Investing vs. Traditional Real Estate Investing
Creative real estate investors must have the educational background in the domain to excel, while traditional real estate investors need capital and/or the financing means to buy an investment property.
Examples of traditional real estate investing:
- Hire a real estate agent to find positive cash flow properties
- Apply for a conventional bank loan
- Buy foreclosed homes
- Negotiate deals based on price only
- Pay big earnest lump sum deposits
Examples of creative real estate investing:
- Locate properties by marketing for motivated sellers
- Find deals before anyone else knows about them
- Work with sellers directly without hiring a real estate agent
- Pay small earnest money deposits
- Rarely require a down payment
- Refrain from applying for bank loans
- Use hard and private money loans
- Buy real estate with owner financing, also called purchase-money mortgage
- Make several offers on the same property
- Participate in bidding wars when selling deals to traditional investors
- Negotiate the transactions based on terms and price
The Biggest Challenges for Creative Real Estate Investing
1. Obtain the right education
Traditional real estate investing does not require the right education, and the abundance of readily available information over the web in the form of blogs and free content is enough to get started. On the other hand, education on creative real estate investing is no free lunch; you might need to sign up for courses to gain the necessary skills and competencies to succeed in this domain. For beginner real estate investors, starting out the ‘orthodox’ way of investing is highly recommended. Once you gain more experience, you can branch out and delve into creative real estate investing if that is something you would like to pursue down the line.
2. Choose the right mentor
Whether you opt for traditional or creative real estate investing, having the right advisor or mentor to guide you and help you make smarter investment decisions is critical. A mentor will speed the process of acquiring the right education and conducting due diligence to tap into investment opportunities reaping greater rewards. Without a doubt, choosing the right mentor will speed your earning potential and double your returns in a short while, especially in creative real estate investing.
3. Invest sufficient time to learn on your own
Be rest assured, no one will spoon feed you with all the necessary information and education in order to ensure long-term financial success, and this is particularly true for creative real estate investing. This is the problem for most real estate investors who want overnight success and apply little effort and work to make it in the business. They want to reap the financial rewards that creative investing can give them, but they do not pay their dues when it comes to acquiring the right education and understanding the underlying principles to succeed. Your mentor can only guide you to some extent, but he/she won’t go above and beyond for your success. It is simple, if you want something you never had (i.e., lots of money), you must do something you have never done.
The Advantages of Creative Real Estate Investing
1. Creative real estate investors don’t need their own capital or credit. Investors can make lots of money and accumulate wealth with very little money to start with.
2. Creative real estate investing is dependent on motivated sellers, not market conditions. Finding motivated sellers is not cyclical, and it results from external factors, i.e., problems such as divorce, illness, financial problems, death, job transfer, downsizing, upgrading... On the other hand, when the housing market is booming, there are fewer traditional deals. When the market is in a downturn, there is an abundance of traditional real estate opportunities.
3. Creative real estate investing is less competitive than traditional investing. Creative real estate investors have the upper hand because they sell their deals to the traditional investors and create bidding wars amongst the investors.
The real estate market is far from static, and the very changing trends and conditions open up an affluence of investment opportunities for investors to reap big financial rewards. Whether you choose the traditional means or unorthodox methods to get started in real estate investing, make sure you choose the right path aligned with your financial and tangible resources.
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