Robert Kiyosaki, author of the Rich Dad book series, has said more than once that you don't have to have money to make money. In "Cash Flow Quadrant" however, he reveals how much money he paid for his first investment condo. What if you want to buy a condo but you don't have a few thousand spare dollars lying around to make it happen?
You can still make your purchase. The trick is, you just have to think about things a little bit differently.
If you have not seen the movie "Schindler's List," you probably should. Not only is it a great bit of social consciousness, its writers did a good enough job on Schindler's character to give you a glimpse into his business know-how. The man wanted to build a factory because he knew it could make him a lot of money during the war. Thing was, he didn't have the capital to build that factory.
But the Jewish community did.
He went to them and presented his idea about how, in return for their investment capital, they could take some of the goods produced and sell them on the black market. He talked to a lot of investors. He raised a lot of money.
You can do the same thing, and indeed a lot of people do. If you see a good deal on a building and you haven't the spare millions lying around to purchase it, put together a cooperative to buy the property. Even if you receive only 10 percent of the property's earnings, that will be a nice, tidy sum if it's the right property.
That is why you shouldn't content yourself with starting too small.
According to Ken McElroy, who authored Rich Dad's "The ABC's of Real Estate Investing," there is nothing wrong with small bits of real estate. He simply says that there is no reason to relegate yourself to them out of fear that you don't have the skills to go larger, because it doesn't really require more skills. You wind up outsourcing a lot anyway.
What a larger chunk of real estate will do, however, is allow you to interest more investors, as they stand to make more money off the deal. A larger piece of real estate will also be very unlikely to slump into zero occupancy.
As McElroy says, if you rent out a single-family unit and that family moves out, you have an occupancy rate of zero, and the property becomes a liability until you can rent it again. If you own interest in a 50-family building and 10 families move out, you still have an occupancy rate of 80 percent. The property is still an asset. You're still making money. And you know you stand to make more again when you get those 10 units refilled.
All of that doesn't even begin to take into account the relative ease of getting a bank loan for the purpose of purchasing an investment property. The bank knows they can make money off that property if you default, regardless of your credit history.
Whatever you are trying to do in this life, you owe it to yourself to put aside your assumptions and find out how to work around potential barriers. Real estate investing is no exception. Just stick your nose in and start learning. There is a way for you to do it.
