There are many people who have succeeded in real estate investing. Many of them, in fact, started with nothing and simply decided to make money with a bold move. While there may be some raised eyebrows at this statement, it’s actually true that anyone can make a profit without buying property. He can earn money with no money down through effective leasing strategies and the right techniques.
Venturing into the real estate business for the first time can be downright scary as one always has the notion that there are a lot of risks involved. However, with good leasing strategies, you can still get into real estate investing without the need for a large investment. Here’s an example:
You enter into a 5-year lease with the option to renew for 2 additional 5-year terms. Suppose you rent the property for $80,000 a year and then find another tenant to rent it for $100,000. You’ll earn a differential of $20,000 each year, which is incredible. In fact, you can earn enough money to earn a decent income every year without making any payments.
You may think that everything sounds so simple and false. The truth is that many real estate investors actually do this. A good lease is a very effective way to earn money with no money down and then raise capital and equity for your next real estate venture. Leasing and subleasing are very common in the United States and have been done by many successful real estate investors.
Most investors try to negotiate a fixed lease for a certain period of time. These investors then draw up a sublease agreement that allows them to increase rental rates afterwards; Let’s say, a period of two years. Excess money earned from increased rental income can be used for repair and maintenance expenses and many other unavoidable charges that may arise.
The lease investment formula basically consists of leasing a property at a low price and then subletting this same property at a much higher cost. Calculate the costs you need to do. These costs include taxes and likely repairs so you can calculate a reasonable rental rate for your tenant. The gross profit should be enough to cover your basic fees and then the rest is yours.
The nice thing about leasing a property is that you don’t actually own it. This generates reduced taxes since the rental income you earn falls under the passive activity rental rules. Taxes can be covered by real estate losses and many other expenses while the property is sublet. You get a fair share of the profits with very little money down the drain.
If this can be done, then everyone will probably want to be the primary tenant and pay less rather than be the sub-tenant and pay more. While this may be true, there are people who only need to rent a house for a short period of time; therefore making them ineligible for fixed-term leases. Offering comfort and decent living space are also other ways to attract people to sublet from you. Finding a good house to live in is not easy and you are there to respond to this need.
Some say it’s like shooting the moon, but it really is possible to make money without paying anything. All it takes is one step and the will to succeed. So set sail and conquer your fears. Make a fortune investing in real estate without buying a house.