As one of the most popular million-dollar real estate tv shows will tell you, anyone can make money in real estate investing. While there are risks involved in buying properties, you have to understand that there are risks when making any investment.
You could invest your money in stocks and see it disappear during a tough economic downturn. With real estate, however, there has always been a steady rise in property values over time. Even following economic downturns, there are still resurgences where property values go sky high.
What are the keys to succeeding? One of the oldest and most tried and true is to buy low and sell high. This method is one reason many investors will buy foreclosure properties. They are under the market value and sometimes with just a little work, they can be sold not only at market value for a profit to the investor but over the market value.
You can make money by putting enough money down on your property to earn a good return on every rental payment. Rents can allow investors to see gains of 8 percent. When equity in the property continues to grow, the value to the investor also increases.
It is important to remember that if you put 20 percent down on a property, you still rent it out at 100 percent of its value. This tactic makes it a high return on your investment. You can be sure you will be getting much more on this type of investment than investing in stocks.
Depending on where you live, you may be able to do real estate wholesaling. This strategy is where you find a good investment for another investor. When they close on the deal, they give you a finder’s fee which can sometimes be thousands of dollars.
Here is a key to making money when buying and holding. Instead of renting out a single-family home to a family consider turning it into a duplex. This plan allows you to rent the property to more tenants for more money.
You can also make money on buying property by refinancing your investment property. Imagine buying a property for $80000. In a year, after investing $10,000 in renovating it, the property is valued at $120,000.
If you refinance at even just $100,000, you are getting a $10,000 profit. Not too shabby if you are doing this part-time or if this was your first investment. You can take that money and invest it in another property and be on your way to becoming a real estate investing superstar.
Another option to consider with refinancing is being able to lower your mortgage payments. By doing this, you can still collect the same amount of rent. This method allows you to see a more significant return every month. Additionally, your property should always be building equity, so your investment is a sound money-maker for you for years to come.
The more rent you can collect on a lower mortgage payment the more money you also have to save for maintenance and repairs. Many investors who are new to real estate fail to prepare for these much-needed repairs from normal wear and tear. If you plan for them and act accordingly, you can benefit greatly and steadily from your original investment.
Do you need to work full time to be a successful investor? Not necessarily. When you first start out you will not want to stop working at your full-time job. You can search for properties online in your spare time and visit them in person on the weekends. Once you find your first investment, you can work on renting it out or rehabbing it on your own time, too. It does not require a full-time investment to pay off.
If you do start succeeding at building a successful and lucrative real estate portfolio, you can eventually quit your job and do this full time. Use these keys to investing, and you will be one step closer to success the moment you start looking for your first investment.