Discover how creative real estate investing can allow you to create massive returns, and how you can turn 10k into 100k or even more, with the right knowledge and training.
How do you turn $10,000 into $100,000 with real estate? Well, you can do it traditionally over a long period of time, or more quickly through creative real estate investing. Creative real estate allows you to accomplish much more in less time! Perhaps you're behind in your savings and retirement plans and need an efficient vehicle to catch up and build wealth. If your goal is to grow your capital 10x or more without taking decades, creative real estate is the answer!
Where Do You Begin?
Starting with Capital
The presumption to turning $10k into $100k is that you have $10k! If you have personal savings, great! But what if you don’t? Let’s start with your capital:
- Line of Credit: Access a line of credit on your primary residence or another asset.
- Borrowing from 401k: Take a loan from your retirement plan.
- Inherited Money: Use funds from an inheritance.
- Loans from Friends or Family: Borrow from those close to you.
Caution: Please be very cautious pulling money from a credit card! While it may be constructive debt, it’s extremely expensive and should be used wisely. For more information, watch How to Raise Private Money for House Flips.
Importance of Education
Now, considering you have some seed capital to grow your business, where do you begin? Arguably, before you even have your starting capital, your focus must be on education. Creative real estate provides a wonderful opportunity, but it requires the right knowledge. Find a mentor who has been successful in the business and get the training you need to thoroughly understand all the creative concepts.
There are a lot of resources available out there, but make sure that whomever you work with has aligned interests with you. Unfortunately, some gurus sell hype with little real education and even less real-world help through deals. Once you’ve paid them for their course, they don’t have much incentive or interest in helping you close anything. Always do your own thorough homework and remember that you get what you pay for.
The right education is worth its weight in gold! This all begins with learning the business and the mechanics of deals theoretically before putting them into practice in the real world. But be clear, that theory remains abstract until you put it into practice in the real world by doing creative real estate deals. Let’s look now at the process of finding and doing deals consistently to grow your $10k to $100k and more.
5 Steps to Successful Creative Deals
Step 1: Marketing
The first step in creative real estate investing is mastering the art of marketing. This is crucial to creative real estate because we’re not looking for deals on the MLS or going to auctions. We work directly with motivated sellers, skipping the competition and utilizing creative solutions to move faster. This saves the seller time and money and allows room to profit on deals traditional investors just wouldn’t be able to do. Spend money on effective marketing and focus your dollars wisely rather than reinventing the wheel and wasting cash. We’ve absolutely mastered this and work with our apprentices to develop the right marketing plan and budget.
Step 2: Securing the Contract
Next is securing the contract with the seller. Get the agreement in writing and we typically do that with minimal earnest money, often no more than $10. This isn't a traditional deal with agents and many hoops and constraints. Depending on the seller’s situation, you may take over Subject To, catch up payments, and get the seller some cash at closing, besides a potential Seller Financed note. Again, this is where creative real estate education and ongoing help from a coach are crucial.
Step 3: Due Diligence
This step involves diving into your due diligence. Conduct a detailed title search. Watch Phil’s training on Investor Guide to Real Estate Title to learn all the details you need to know about title. With creative deals, this is especially important as we don’t always obtain a title policy.
An inspection is also part of due diligence, but time it after the rest of your diligence is checking out – no need to spend $500 until you’re confident investing more money before closing. You could pay for an appraisal but rely on your analysis of MLS comps rather than solely on an appraisal or agent’s CMA. With experience, that’s an expense you can skip. Another key part of your diligence will be a scope of work and bids from reliable contractors. You must have the condition dialed in before you take over the property. If you work with the right reputable contractors and approach with a solid scope of work, you shouldn’t need to spend money on most bids.
Step 4: Determining Exit Strategy
Now armed with all that information, you’re ready to determine your best exit strategy:
- Rehab to Retail: You may decide to close and rehab to sell the property. Rely on all your diligence to determine what work to do, as not all improvements will yield a good return.
- Long-term Hold: Perhaps you want to hold the property long-term, which means you want clarity on getting the property into rent-ready condition, and of course your rent analysis to ensure solid cash flow.
- Quick Flip: Especially if you’re new, you may want to flip the property for fast cash. This may or may not require repairs but aims to move the property quickly, ideally before taking title. It’s what we call the quick nickel, and many times it will beat out the slow dime in comparison.
Step 5: Closing
Once clear on your exit strategy, you’re ready to move to closing. We often reduce costs and headaches with creative techniques based on the deal type: whether involving Subject To or Seller Financing, and if you have a title company versus a closing attorney involved. Depending on the deal, strategy, and money and timing required, this is where you often turn your investment into profit! Your goal will be to learn from each deal to get more proficient and efficient, spending the least amount needed to maximize return and profits. Rinse, repeat, and build momentum, growing your seed capital into consistent real estate profits. For more details on how we do this, check out Phil’s video: How to Turn a Little into a Lot with Real Estate.
Real World Application
Can you grow your investment 10-fold in one deal? Typically, no, although it happens occasionally. Most worthwhile endeavors take time, effort, and money. Growing your creative real estate business will be step-by-step, and the more you do, the more you will master!
What kind of timing and results should you expect? The biggest time investment is education, even more with creative real estate investing. For some, this may take months or more, while others try to crash course in a matter of weeks, and others take the slow and steady approach that may last a year or more. The pace is up to you and your schedule, but the key is having a training plan to ensure clear steps and avoid wasting time. All that theory must take shape as you work on your first deal, ideally with a coach showing the ropes and bringing all that education to bear in a successful real estate deal. From there, it’s a matter of assessing your results and returns.
Apprentice Success Stories
So, here's the question: How many deals do you think it will take to achieve $100,000 in profits? In reviewing some of our current apprentices, let's look at a few examples and how many deals it took them to break $100,000.
Scott in the Southeast
Scott began his journey with minimal out-of-pocket expenses.
- First Deal: Out of pocket: $525. Profit: $13,715. (Wholesale)
- Second Deal: Out of pocket: $1,593. Profit: $24,506. (Wholesale with creative terms)
- Third Deal: Out of pocket: $81,000. Profit: $74,648. (Rehab)
Total: Three deals to break $100,000, with $112,869 in profits. Scott has continued to do more rehabs and wholesale deals with creative terms. His most recent deal involved a $59,986 investment that made him over $104,000 in profit.
Adam in the Northwest
Adam's journey began with a modest $1,800 investment.
- First Deal: Out of pocket: $1,800. Profit: $6,400. (Wholesale)
- Second Deal: Out of pocket: $205. Profit: $11,395. (Wholesale)
- Third Deal: Out of pocket: $2,273. Profit: $13,334. (Creative deal)
- Fourth Deal: Out of pocket: $205. Profit: $8,394.
- Fifth Deal: Out of pocket: $4,689. Profit: $18,207.
- Sixth Deal: Out of pocket: $87,500. Profit: $46,847. (Rehab)
Total: Six deals to break $100,000, with $104,577 in profits. Adam has since completed other creative deals, with his most recent involving $779 out of pocket and netting over $58,600.
Scott in the Northeast
Another Scott, based in the Northeast, demonstrated impressive skill in maximizing return on minimal investment.
- First Deal: Out of pocket: $3,035. Profit: $43,686.
- Second Deal: Out of pocket: $1,847. Profit: $44,694.
- Third Deal: Out of pocket: $863. Profit: $14,102.
Total: Three deals to break $100,000, with $102,482 in profits. In his most recent deal, Scott invested $2,338 out of pocket and netted $45,552 in profit.
Tony in the North
Tony's journey started with small initial investments, yet he achieved considerable success. Consistency and a strategic approach allowed him to increase returns with subsequent deals.
- First Deal: Out of pocket: $200. Profit: $6,667.
- Second Deal: Out of pocket: $220. Profit: $13,539.
- Third Deal: Out of pocket: $202. Profit: $20,109.
- Fourth Deal: Out of pocket: $851. Profit: $6,957.
- Fifth Deal: Out of pocket: $1,680. Profit: $11,286.
- Sixth Deal: Out of pocket: $222. Profit: $32,651.
Total: This persistent growth culminated in a seventh deal that realized a profit of $35,778, effectively surpassing the $100,000 profit goal. Seven deals to break $100,000, with $126,987 in profits. Tony's recent rehab deals have continued to yield high returns, with $74,478 in profit from a $64,278 investment.
Jordan in the Northwest
Finally, let's look at Jordan in the Northwest. His first deal required more capital for a terms deal that involved significant repairs.
- First Deal: Out of pocket: $26,670. Profit: $145,628. (Terms deal)
- Second Deal: Out of pocket: $8,024. Profit: $103,228.
Total: Just one deal to break $100,000! Jordan's strategic investments have proven highly profitable.
Every apprentice faces unique challenges, and each real estate deal is different. And as with any investment, you could lose money! But in my experience that only happens when you don’t have the right education, and you’re not following a solid, successful mentor in the business. The only real barrier to this business is knowledge. Get the right education, commit yourself, work consistently with the right mentor, and you can absolutely achieve success in creative real estate investing.
So, how many deals will it take you to learn the skills you need to transform your financial future and make 100k, 200k, or a half a million in residential real estate as a creative real estate investor? What’s holding you back? Is it coming up with 10k in seed capital to get started? Go back and review the videos on how to overcome that obstacle. You can’t afford not to!
Every Successful Real Estate Investor Has a Mentor
Real estate is the best business there is, and creative real estate investing can help you take your business to the next level, but you need the right training and education. Get your mentor here: Freedom Mentor Apprentice Program.
If you have questions for us, text FREEDOM to 305-315-8030 or post a comment below.
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