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Becoming a real estate investor is the dream of many Americans. Whether you have been watching the Home and Garden shows that make investing in real estate look sexy, or simply know it is the best way to create a passive portfolio, you got hooked!
Becoming a Wealthy Real Estate Investor is Many Americans’ Dream!
I have had some success, and some failure over the years in real estate investing. I only knew a few ways to make money in real estate. Since I don’t want you to do the same thing I did, here are…
Three Strange (Yet Highly Profitable) Ways to Invest In Real Estate Without Ever Seeing a Property!
You know that having another stream of income (or several) is the best way to build wealth, but you just don’t know how to get started…
Most people fail at real estate straight out of the gate because they drink the Kool-Aid and think it is simply another easy way to riches.
In fact, in 2003 I bought my first property, but it wasn’t until 2007 that I thought I could make it a career…
Bad timing to say the least!
I lost my shirt, and had to start from scratch, so I figured I ought to learn how to invest in real estate in a way that wouldn’t cost me everything.
That’s when I discovered these three powerful investment strategies that most “gurus” aren’t talking about, which is why I want to share them with you today!
These strategies have been used by countless millions of people throughout history…
People like J.P. Morgan, Warren Buffet, and even the Beverly Hillbillies!
So what makes these strategies so appealing?
Simple…you don’t even need to see the property to get started!
This means no painful sales process for you…
No hammer and nails…
No contractor licenses…
No ongoing maintenance…
No midnight wake-up calls for repairs…
Virtually no ongoing involvement at all!
Of course this is because we are shifting away from you investing all of your time, and instead using a resource that is much more readily available…
Time to think of real estate investing like you would any other investment…
You INVEST your money, not your time, blood, sweat, and tears like so many others laying in the real estate investor graves right now.
You simply find a reputable person to put your money with, and then start using these strategies as an alternative investment vehicle.
This way you can diversify your portfolio even further, and maybe, just maybe, hedge your losses and amplify your gains even better!
So, what are these strategies?
Let’s see, shall we…
1. Bank on the Land!
This strategy, actually called “Land Banking” is a way for a person to buy property that has yet to be developed. This goes to Will Rogers’ saying, “Buy land…they aren’t making anymore of it!”
It might seem strange to discuss just buying property outright with nothing on it that will make money, especially when I just said you don’t need a thorough understanding of the whole buying and profiting aspect of real estate!
However, Land Banking refers to a way for a group of investors to buy a very large amount of land in what is considered the “Path of Progress.”
Simply put, you are banking on the fact that the city, town, or rural area will eventually start or continue developing in a certain direction, and investors simply buy the land well ahead of this progression.
The beauty of land banking is that there is really no ongoing expense other than property taxes, which are generally very low since there is nothing on the property.
Then, as developers come in and start building apartments, housing complexes, strip malls, industrial and commercial buildings, etc., you will be poised to profit.
In many cases, the land gets sold to a developer who sees the potential as well, but only once he/she knows the land can be developed for a profit.
At this point you sell the property for a nice profit and simply let someone else do the heavy lifting.
As an example, say you purchased 5% of a 100 Acre property for $25k five years ago.
Today a developer comes in and wants to purchase all 100 Acres for $2 Million.
Since the total purchase price was originally $500k ($25k x 20 Investors at 5% each), the investment just gave a 400% return in 5 years, or 80% per year!
Of course many opportunities might take longer than this to develop or not return such a high rate, but you get the point.
2. The Land Beneath the Land
Another interesting strategy is to own the land and everything else under the surface of the property.
Yes, believe it or not this is a thing.
Most people aren’t aware that there are valuable resources underneath their land that many companies are willing to pay for.
In fact, several oil and gas drilling companies don’t actually own the physical property where they drill. The instead purchased the land’s…
This simply means the owner of the mineral rights gets to extract whatever is under the surface (usually crude oil or natural gas), and will pay the land owner for the privilege of doing so.
However, a cool strategy for you would be to purchase the mineral rights in an area where drillers already found lucrative minerals or resources, and then sell the rights to a drilling company on a royalty basis.
It isn’t uncommon for mineral rights investors to earn 18% per year for several years, even decades, without ever needing to do any of the work!
This is exactly how the Beverly Hillbillies got their fortune! Of course you won’t have to shoot a bullet in the ground to make money doing this!
3. Be the Banker!
Of these three strategies, this is the least bizarre way to profit in real estate, but quite possibly the most lucrative.
When the average person thinks about buying any type of real estate, the first place they turn for financing is a bank, right?
What if you could become that bank for someone else?
You would be able to get a good return on your money and help someone else out in the process!
In fact, the PRIVATE LENDING world has grown dramatically since 2008.
One study shows that the market is already at $5.5 Billion (yes, with a ‘B’), and growing (84% year over year growth compared to 2% for traditional/commercial lending growth).
With the JOBS Act of 2012 and Crowdfunding coming into play, this market could rise to $1 Trillion in the next few decades!
As a private lender, you simply replace the bank, and use your money to fund a purchase and possibly repairs on a property.
The easiest way to do this is to find a qualified mortgage broker and let them know you have money to lend, and let them do the rest.
In fact, many private lenders will make 8-12% per year on their money, and the mortgage broker will make the “points” on the loan for creating the relationship.
This way everyone wins!
Of course you could lend directly to an individual if you want, in which case you’d need a Promissory Note completed, and all the necessary documents just like a bank.
If you decide to go this route, always use an attorney or escrow agent to make the transaction.
This way you will be protected, your money will be secured properly with a mortgage, and the borrower will have very clear guidelines on how to pay you back.
So there you have it! Three Strange ways to invest in real estate without ever seeing, touching, or working on a property!
And here you thought you had to open an account at Home Depot and start perfecting your hammer swing!
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