When I first got into real estate, I thought real estate worked by buying a piece of property, waiting for the price to go up, and then selling for a profit. Later, as I gained more experience and perspective, I realized that smart investors don't wait for appreciation; instead they force appreciation by buying at a discount and then doing improvements that increase the value of the property. However, today I want to take that one step further by introducing a perspective that you may already know. This perspective helps move you away from needing to save up money to invest in real estate and instead puts you in a position to make deals happen at any time.
The perspective is this: Real estate investing is all about solving problems.
Any type of real estate solves some type of problems. Apartments solve the problem of people needing housing. A commercial space solves the problem of a business needing a place to serve its customers. A warehouse solves the problem of needing a place to store things.
The value of a piece of real estate is related to the value of the solution it brings to a problem.
For example, a nice beachfront property may solve the problem of providing a luxurious place for someone to live with a great view. This is a problem that many people will pay dearly to have solved.
Which brings me to the term of investor. When I think of the word investor, I think of needing money. But essentially, if you're able to solve problems in real estate, you can successfully invest without having any money.
A great example of this is the field trip we'll be taking this Saturday to Sokcho to check out properties that were purchased with very little money by one of our members. These members recognized that there was a problem - owners who wanted to sell their apartments and tenants who wanted to put down large money deposits (jeonse) in order to avoid paying monthly rent.
I wrote about this in How to buy an apartment in Korea for $5,000.
That's why instead of investor, I prefer the term real estate entrepreneur. Why? Because entrepreneurs don't start with money; they start with great ideas - ideas that solve problems. The bigger the problem you solve, the more you can earn for that solution.
Where do great ideas real estate ideas come from?
Great ideas can come from anywhere: From your own imagination, reading book, studying textbooks, taking courses, and of course - probably the greatest generator of ideas - networking.
By networking, not only did I learn about ways to invest in Korea with little or no money down, I also learned the upside potential of the neighborhood that I bought my first house in (now up over 30% according to comps in less than six months), and about Mobile Home Park investing in the US, which usually comes with Seller Financing (that means the owner acts as a bank for the right buyer and basically loans you the money to buy his or her property.)
These are all great ideas that I learned from meeting new people and asking good questions.
So, my advice to you: Stop thinking of yourself solely as an investor and waiting to have money to invest. Instead, start thinking about how you can help solve someone else's problems and make some money in the process.