Are you short on cash or short on time? Hopefully you have at least a tiny bit of one or the other to spare: money or time. Here are our top recommendations for getting started in Austin real estate investing whether you have time and no money or money but no time.
I have time but no cash, how can I get started in Austin real estate investing?
You shouldn’t need more than $1,000 in earnest and option money to secure a contract on most Austin properties. It’s possible do it for as little as $10.
Wholesaling is how many (if not most) real estate investors without a lot of cash get started. Find and secure a deal and refer it to anther investor for a finder’s fee. That might be be a “bird-dog fee” where the buyer pays you for the lead or you could sell the contract to the other investor via an assignment fee or a double closing.
Running a renovation will be difficult without some cash reserves, but if you get a great deal (under 70% of the retail value including renovations), it’s possible to invest in a renovation with a hard money loan and no cash out of pocket.
Partnering with a more experienced investor can be a great way to get into projects that might otherwise be prohibitive. If you’re interested in partnering, drop us a line. We have spent the last 10+ years in Austin real estate investing with a wide range of projects including wholesaling, quick flips, rentals, rehabs and new construction.
Focus your time and energy on finding motivated sellers. Finding the deals is the hardest part of real estate investing and the more leads you get, the more successful you’ll be. Also, processing leads is the best way to practice evaluating deals and negotiating with sellers. Target people with problems. These are the only people with enough motivation to sell their property quickly and at a discount.
I have cash but no time, what kind of real estate investments should I target?
Consider investing in managed hard money loans. You’ll earn 10% on your money with very little time investment on your part. Hard money loan investments are secured by first lien mortgages at 70% or better loan to value, so they are unusually secure investments.
For example, if a property is worth $100k, the maximum hard money loan from Little City Investments is $70k. If the borrower doesn’t pay, the Texas foreclosure process is very quick (about 45 days) and the investment is very well secured. Hard money loan investors also have the added benefit of seeing what kind of deals other Austin real estate investors are finding and working on.
Rental properties, both residential and commercial, can also be an excellent investment if you have cash but not the time (or stomach) for a renovation or construction project. Budget for a property manager if you don’t have time or energy to deal with tenant demands.