Making Money in Real Estate Investing in Today’s Fast Paced Market
Making money in real estate investing is not for the impatient, or those seeking a fast financial turnaround. Real estate investments take time to understand, and there’s a process to learning what works and what doesn’t in this fast-paced environment. Aside from obtaining a real estate license, and working as a real estate agent, how else can one make money in real estate? What investments can individuals work with to find rewarding financial returns on their money?
The answer is in real estate investment; and it’s even possible to invest in real estate without even using your own funds. How does it all work? Here are seven ways to making money in real estate without breaking a sweat, or the bank.
Making Money in Real Estate:
Fix It and Flip It
Popular shows such as ‘Flip or Flop’ on HGTV, or the original ‘Flip this House’ on A&E have convinced many entrepreneurial minds to go into the ‘fix and flip’ business. The concept is simple; individuals or partnerships purchase a home in need of repairs and renovation, fix it, and then sell it for a profit. It’s a short-term real estate investment strategy that, if approached with education and care, can easily turn a profit for investors.
Another simple and financially appeasing concept, wholesaling houses is another great example of profitability. A buyer purchases an undervalued home with a contingency that they can pass off the contract to another buyer in a short amount of time. The original buyer passes off the contract, and at closing keeps the difference as a profit. It’s as simplistic as it comes for real estate investing.
If a real estate investor has the resources to purchase a property, or multiple properties, with the purpose of renting it out for a profit, this is an easy real estate investment. Investors may also move into commercial spaces; providing office or work space. Whether the investor has a mortgage on the home and charges rent priced competitively above his or her monthly payment, or the investor owns the property outright and competitively prices the property to sustain regular income, there’s plenty of money to be made. This usually requires a substantial investment, but is one of the most common ways to make money in real estate.
When someone falls short on the value of their home, the lender may decide it’s in the best interest of all parties involved to accept a short sale. A short sale is defined as when a home sells for less than the value owed to the lender in order to release the lien. Sellers must present the reason for their financial hardship, and the lender will need to perform an appraisal, amongst other qualifying factors. Usually the home is sold ‘as-is,’ and buyers put effort into either fixing and reselling the home at an added value, or purchasing the property to ‘hold’ and bring in tenants to turn a profit.
Notes at a Discount
The perfect option for investors with cash, purchasing notes is an ideal alternative for real estate investment. A ‘note’ is drafted when two parties work together, and one of the parties gives the other party money to purchase a property. The ‘note’ is a promise to pay. Whomever is listed on the note is who is to receive payment, regardless of where the money came from originally. Notes are sold on the open market when the original note holder decides it’s time to ‘cash in’ on the original loan. Simplified, it’s as if the owner of the note is receiving payments from a tenant, only there is ownership involved. A lot of times this is seen in foreclosures, or loan renegotiations.
Short for ‘real estate owned,’ REO properties are a part of a bank’s portfolio after the property- be it a townhome, condo, single-family home, or other form of real estate- is foreclosed and officially owned by the bank. This happens when there is no ‘bidder’ to take ownership of the property. REO specialists are employed by banks to oversee such properties, and find buyers to recoup investments and keep cash flow active. A lot of times REO specialists will seek real estate agents, who then find real estate investors to acquire the properties. These homes are also usually sold as-is, and a lot of times are treated as ‘flip’ purchases.
Same concept- foreclosure happens and either a bidder wins the property, or the bank’s REO specialist is given the task of finding a new buyer. By purchasing real estate in bulk from the bank, there’s a chance for bulk profits- which means the margins are much higher. The terms are specified almost immediately, which means the chances of having transactional difficulties is less, and it’s an easy concept for even the most novice of real estate investors to understand. It’s an advanced level of REO investing, with a quick turnaround and higher profits.
Making money in real estate can be as simple as obtaining a real estate license and going to work for a client, or taking the time and energy needed to turnaround investments for a larger profit. While working in real estate is a rewarding career, there are other opportunities in the field that can better serve those who have access to the resources needed to become successful real estate investors.
By adding to educational resources and incorporating my real estate investing programs into your routine, I can help in providing guidance in any of the above areas of real estate investments. You don’t have to be a realtor to understand the financial opportunities available with real estate; you just have to have the encouragement and support to find the best program for your strategy.