The first step to investing in real estate is to get earnest money. This does not have to be a large amount, but to get other people to invest with you, it is necessary to get other people to sign on the dotted line. Here are some of the ways to fund your real estate ventures.

Rental Property Investments

By starting with rental homes, you will start with a basic understanding of who you will be working with. You know that the major sources of financing (credit unions, mortgage brokers, banks, etc) will require at least 20% down. If you cannot find that, there are other types of investments that will allow you to obtain that down payment.

Wholesaling

This is an investment strategy that requires no improvements on a property. It is a short-term plan that gives you practical experience in the real estate business. With wholesaling, you will snatch properties that others have overlooked. Then you sell them to a consumer buyer. Your customer base will consist of people who do want to fix up the property either to rent out or profit off of a flip.

These deals are meant for a quick turnaround. You will get to know what investor buyers are looking for to turn a larger profit. Keep in mind that you will be trying to profit off of a property that a buyer is trying to get a discount on. Knowing how to market for ready-to-rent buyers vs fix-and-flip will maximize this.

Hard money investors are the primary source for obtaining funds for these deals. Hard money requires collateral which will be the amount that the home is worth. The fees on a hard money loan are high and you will only receive a loan for a percentage of the home’s value. When you are working an agreement for sale, factoring in the fees for the loan will alleviate the blow if it takes a little extra time to close.