This is going to be an article about how to gain income from real estate using only creativity and an ability to convince, with zero investment. Each of these methods comes from personal experience.
I decided to write this article, because I see that people are interested once again in real estate transactions and many are asking how to make profit. These are not the only ways, these are the ones which I have personally realized and would not recommend reading it as “know-how”, more like an opportunity to broaden your perspective on the topic of earning using property. Probably you will be able to find your own way to start business activity.
IT ALL REQUIRES ONLY OPEN, CREATIVE MIND AND A DESIRE TO BE ACTIVE.
1. Short-term rental business
I have two stories on the topic and in both cases I did not invest a dime of my own money.
The first one: A gentleman from Switzerland purchased an apartment in the center of Riga for himself to stay there 2 to 3 times per year, spending up to 20 days a year he spends in Riga. The rest of the time the apartment is vacant and during a conversation I suggested that the apartment can be rented out for short-term on booking.com, and he thus could come to Riga whenever he needs, reserving the time timely and during the remaining time he would be making profit.
We agreed to split the income 70/30. 70% to the owner, 30% to me. We agreed that all the necessary bed linen, inventory, furniture and other things are provided by the owner, I take care for guest management. On average we earned 600 – 750 EUR and with 100 – 150 EUR expenses, BINGO! 135 – 195 EUR/month without investment and experience in short-term renting as a bonus obtained. Most probably if I had to repeat he same agreement today, I would try to direct the potential profit distribution towards 50/50.
There are many owners who would gladly not manage their property themselves and this is a great solution, how to assign management to somebody else and receive income each month. Even easier is the method with fixed rent a month to the owner and all the extra income goes to the object manager.
The second. While searching for a new apartment for myself I found one which I really like and where I subsequently currently live. Because I was ready to move in only in 2 months, I acted in the following way – I concluded an agreement with the owner who expected a security deposit and the first rent payment in 2 weeks. I found a 4 people company within those 2 weeks who needed short-term accommodation for 1 month. We agreed on the payment before moving in. In such way I paid the owner and rented out the property for the second month on booking.com. As an apartment had no furniture, I had to agree with the furniture seller, that I would pay in a month.
Using the second month income I covered utility bills and the rent, as well as furniture invoice. As a result I live in an apartment I like, and exactly when I was ready to move in, and the furniture is paid for by the short-term tenants.
First about the term – wholesale. It is a term which describes the following situation – You find a property which the owner is ready to sell for 30 000 EUR, You agree on the earnest money with payment settlement term ~5 days or make an installment of 5 – 10% of the asking price (you can borrow this money). You know that repair will cost 10 000 EUR. You offer the following proposal for your investors, for example, 5000 EUR. In such way You can gain income from a transaction with a real estate without ever becoming an owner and without investing Your funds, the investor
receives the object to be able to earn 10 000 EUR after the refurbishment.
The main objective of the method is to find an attractive transaction in order to give the opportunity to somebody else for remuneration. I remember how I succeeded with such transaction in ‘Zolitūde’ without ever even looking at the property. The numbers was all I considered.
Using this method I purchased my first rental property. Most of the sum of funding was financed by the owner himself with 4.17% annual interest and 12 year term and I borrowed the remaining money privately (I have to admit that I used a little bit of my own money here too, but I could have actually borrowed it all).
I will show a practical example here for somebody who qualifies for ALTUM program. I really like little one-bedroom apartments, so I will be explaining an example with an apartment in the city center with 20m2 area costing 25 000 EUR. Such property can be rented out for ~ 220 – 250 EUR/month. To purchase it, the necessary down payment and other initial costs will be up to 2000 EUR. Monthly payments with 2.5% annual interest over 30 years will be 53 EUR/month.
The 2000 EUR can be borrowed from a friend, relative or anyone else by offering to pay 120 EUR back monthly for the next 2 years. 220-100-53=67 EUR/month. So without your own investment you can obtain an object with brings in 67-100 EUR/month for the next 2 years and after that 167-200 EUR/month with credit payment being covered at the same time.
Find a partner who owns a real estate or has money to invest. With the partner who already owns a property/-ies, offer to help with management and finding tenants, real estate maintenance and other day-to-day activities for remuneration. Oftentimes such services are used by people to whom the property management is not the main field of activity or their own place of residence is far from the investment properties. Living in Ludza, A small town in Latvia, (or London), but the apartment owned is located in Riga. Agree that You are going to be receiving 10-20% of the property-generated income for Your management services. The split varies widely depending on the situation and amount of work necessary.
With the partner who has money. Agree to find properties in which it makes sense to invest, direct the refurbishment and sales process and split the profit. Depending on the appetite of the investor, it can be 50/50, or any other ratio You agree on.
Market price for inter-mediation varies from 3 – 5% from the transaction amount. Familiarize Yourself with intermediaries and offer them to attract customers. Agents who are oriented towards cooperation are usually ready to split their remuneration 50/50 with somebody who brings in the customer. I am one of such and with the people who give me clients to any of my objects, I will gladly share my profit.
And there are countless ways like that to profit from real estate without Your own investment, simply by using creativity and Your own energy. I am ready to share even more detailed information regarding each of such methods privately, if You would like to cooperate.
BE READY THAT USING ANY OF THESE METHODS, THERE WILL BE A LOT OF RESISTANCE FROM THE ONES OFFERED THE ALTERNATIVES AND NON-STANDARD SOLUTIONS, BUT THERE ARE ALWAYS PEOPLE WHO HAVE HAD POSITIVE EXPERIENCE OR THEY SIMPLY TRUST YOU, SO BY FINDING THE RIGHT PERSON, YOU WILL BE ABLE TO SOLVE THEIR PROBLEMS WITH THE POSSIBILITY TO EARN FOR YOURSELF USING REAL ESTATE AND WITHOUT INVESTMENT OF YOUR OWN FUNDS.
This is a guest post by Deivids Cjuksa, a successful real estate businessman in Latvia. If you ever need some help regarding Real Estate, do not hesitate to contact Deivids.