No-money-down strategies work. Here’s proof.
People often ask me if it’s possible to make money in real estate if you’re starting with nothing.
It is. 100%.
Now I could give you lots of examples from students that I’ve worked with personally, but I thought this CEO profile from the AFR is a great example of what the upper bound actually is.
It’s the story of Carol Chow, who basically went from public housing to being one of the wealthiest developers in Hong Kong:
Carol Chow isn’t your typical Hong Kong real estate developer.
Raised in a Kowloon public housing project, the 39-year-old comes from a different world than the city’s billionaire property clans. Yet, in just a decade, she has built a company from scratch that’s quickly found its own niche in the market.
Chow’s Lofter Group specialises in redeveloping buildings for global institutional investors including Schroders Capital and Singapore’s SC Capital Partners, and now has more than $US1 billion ($1.43 billion) in projects under management.
In a territory where land is famously scarce, the company scours sites with run-down buildings that can be bought and made over. It might also start to acquire land at government auctions, putting itself in direct competition with established developers that have held sway for decades.
“The industry has always been dominated by those big property families,” Chow said in an interview. Even newer entrants are usually manufacturers turned builders with abundant cash to deploy, she added. “Without a strong family background, we have to make use of our professional service as an entry point.”
Chow is a unique presence among real estate company founders in Hong Kong. With her dyed bob hair and hoodie, she doesn’t look like her counterparts who are mostly men in suits…
Asset-light model
Without the backing of old money, Lofter touts its ability to help foreign institutions enter the market by offering local expertise. Unlike most developers in the city, it adopts an asset-light model, relying on investors for capital. It typically owns just a small proportion of the real estate and picks projects too small to attract bigger players.
What they’re calling an ‘asset light’ model, we call the “knowledge partner” model.
Because there are lots of people out there – and lots of people within the I Love Real Estate community – who are asset rich and time poor.
These people want to do more deals, but they don’t have the time to do the research, or they don’t have the time to manage the project, or they don’t have the time to uncover the strategies that are really going to work in particular markets.
If you have this knowledge or you can acquire this knowledge, then you become can become a very valuable member of a team. You go into a joint venture with a ‘money partner’, bringing expertise as the ‘knowledge partner’, and you’re then entitled to a cut of the profits.
And I can tell you, if you’re starting with nothing, local area expertise for example is a lot easier to pull together in a short time than a $300,000 deposit is.
And as Carol Chow’s story shows, the sky is really the limit. Knowledge is valuable, no matter how high up the wealth tree you go.
So who knows. Maybe you’re going to be the next person to go from nothing to the Queen of Queensland.
DB.