Want to dive into real estate but don’t have capital?

Here’s a few suggestions based on a recent case study,

Real Estate over the last few decades has truly boomed, I think we can thank the internet & the coaching industry for giving real estate so much exposure.

So many people I personally speak to either have dreamed of doing real estate, are curerntly dreaming of it or are already making steps towards doing it.

But, one challenge often arises… “I don’t have any money”

A recent case study came about when I was told of a situation where an individual wanted to invest but had a maxed out line of credit, maxed out credit card and a no savings but a desire to learn, invest and grow a real estate a portfolio.

Here are a few suggestions if you find yourself in a similar situation,

1. Recognize, there are creative financing strategies,

   1. VTB’s: vendor take back mortgages allow the vendor to hold the existing mortgage while you take ownership

   2. Private lenders: private lenders will finance projects without credit or other considerations, but often times will look into the projects themselves

   3. Raising capital to do your real estate projects: additionally, one of the best ways to get into real estate is to raise the capital to do a project

2. Second, the biggest advantage you can have is an existing home, should you have one, here’s what I recommend (ps, see this blog about house hacking - https://www.areteholdingsgroup.com/blog/house-hacking):

   1. First, assess your situation,

      1. Does your home require work or is it outdated (allowing you to do work)?

      2. Is there any value add opportunity? I.e., an unfinished basement?

      3. Are there any hidden advantages, like living in a bungalow with a side entry and therefore allowing you to add a secondary suite?

   2. If your property is already in good condition, but you’ve owned it for a number of years - i.e., a new build but is 5-10 years old, it will likely have appreciated, therefore, you can request an updated value on the property

   3. If the property does have the ability to increase value,

      1. Obtain an as-is value (from a realtor) and obtain an as complete value (from a realtor) which identifies the value of your home once you’ve done work to it.

   4. Then comes the creative part, work with a mortgage broker and either, obtain lending based on your planned renovations or if there is equity in your home, consider refinancing with a lender as well and pulling out your equity to utilize for another purchase, or to buy off your highest debt.

The beautiful thing about utilizing your existing home in my opinion is first, you can gain first hand experience on your own home, i.e., how to manage a construction project, learning the ins and outs of a refinance, and this project can be utilized to showcase to investors you now have experience, additionally, its far easier to leverage the home you live in, vs, acquiring a second investment property.

A refinance is the process where you apply for a new mortgage (typically as it’s favourable or for the purpose of pulling out equity) and payout the existing debt with a new mortgage and the difference between the existing mortgage and the new mortgage essentially becomes “cash” in your bank account but in the form of a mortgage which you can then utilize for anything else, but in this situation further real estate or paying off other debt.