Talking or even thinking about real estate, mortgages, and contracts can often seem like a daunting task that strikes fear in the hearts of even the most grown-up adults.
Plus, with the Victoria real estate market having a higher demand for housing than what is currently available, a lot of people might simply not have the finances available to invest in the hot market, despite its potential for high returns.
Luckily, we were able to chat with the organizers of the Victoria Real Estate Investment Expo, and they explained to us, in layman’s terms, how the average Victorian can afford to invest in the real estate market with little to no money at hand.
Now we want to impart our newfound wisdom! Check it out:
1. Team up!
Partner up with someone on a joint venture who has the cash or equity but doesn’t have time or isn’t into managing the property. It’s perfect for novice investors because you get to do the work (it’s a LOT of work), learn the hands on side of the business and – this is the best part – get your foot in the door for zero money of your own!
2. House Hacking
If you already have a home/investment that you live in, this strategy is to rent out rooms or suites in your own home so that their rent is paying your mortgage and expenses, and you live for free. You can even take it one step further and rent out a storage space in the yard or driveway. Savvy, right?
3. Vendor Take Back (VTB)
Basically, the seller turns into the lender with VTB (or seller financing) and you pay them the “mortgage” that would include principal paydown – most likely at a premium interest rate. But this allows you to get in for less money and more easily qualify for the mortgage, rather than working with traditional lending.
The seller and buyer work out an agreement that includes the interest rate, repayment schedule, and consequences of payment defaults. Both parties should get their own independent real estate lawyer to provide legal advice, compared to working with a business lawyer who most likely doesn’t know the ins and outs of real estate strategy.
4. Borrow to Flip
A little tip – most passive real estate investors (investors with money who don’t want to do the work) are looking for returns between 10% – 15% minimum, depending on the risk, involvement, and term time. So here’s where you come in – if you find a property that you can quickly flip for a 20% + return on investment, then borrow from a private lender at 12% interest, you have to opportunity to make that 8% without using your own money! Genius.
5. BRRRR. (lather, wash, repeat)
Buy, Renovate, Rent, Refinance, Repeat strategy – done well can get you a FREE investment that also provides a monthly income. Here’s what to do: A) Borrow 100% of the amount needed for acquisition, closing costs, renovations and transaction fees.
B) Close on the property, renovate it, and add enough value through the renovations to be able to have all your expenses add up to less than 80% of the After Repaired Value (ARV) / appraisal.
Here’s an Example:
Say the purchase price is $700,000 and renovations will cost $100,000 – you’re into it for $800,000. If the ARV is over $1,000,000 and the bank will lend you 80% Loan To Value (LTV) then you will get more money back than what you put in. Also, if it’s a rental property, there could be a cash flow opportunity there as well! #Chaching
6. Rent to own
Rent to own is a win-win way to get into a house and start getting the property working for you while you build the money for a down payment. Investors usually find a place that they can rent out a suite or other bedrooms and make bigger rent payments to start a forced savings plan. You can agree on a price to pay now and possibly do some renovations and gain some equity before you even on it.
7. Wholesale a property or contract
This is the perfect way to get to know your market and other investors while also making a quick buck. If you find a great deal, investment, or opportunity, get it under contract and sell that contract or deal to another investor. You’ll get your foot in the door and also start building a great rep in the market.
To learn more about these and other real estate investment hacks, head over to the Victoria Real Estate expo on March 3rd!
Here’s how two people can win a pair of General Admission tickets!
- LIKE Victoria Real Estate Expo on Facebook and comment below to let us know (1 entry)
- CLICK ‘Interested’ or ‘Going’ on the Victoria Real Estate Expo Facebook event pageand comment below to let us know (1 entry)
- LIKE and SHARE this post and comment below to let us know (1 entry)
Contest begins today and the winner will be drawn on Thursday, March 1st – good luck!
- When: March 3rd, 2018
- Where: Crystal Garden, 713 Douglas Street
- Admission: $35-$250. Use the code “ExpoBuzz” to take advantage of their Buy One Get One 50% off on the General Admission tickets. Click here to get your tickets today!