How to make money in real estate is a question best asked of either former President Donald Trump or, better still, Chandler David Smith. Each made their fortunes in real estate relatively young in life.
Today, President Trump is a billionaire and Chandler David Smith is a multi-millionaire, respectively, and both made their fortunes from real estate. So let's talk about some pointers regarding how to invest in real estate.
However, if I am running ahead of myself, just what is real estate anyway?
2. What is real estate?
Broadly defined, real estate is immovable or permanent property. It consists of land and the buildings on it, as well as its natural resources such as trees, crops, minerals, and water.
However, legally speaking, real estate is understood when broken into real, meaning land property and estate, the "interest" a person has in that land property. It is perhaps for this reason, that, in the words of the late Myles Munroe, "Real Estate is REAL estate", by which he meant that property is the only true inheritance to leave your children and grandchildren.
Although there are different types of real estate, most people when they hear the term, only think of residential real estate. Not to be forgotten, is commercial real estate. Commercial real estate is property that is used for commercial purposes. This can include offices, hotels, warehouses, and retail space. There is also agricultural real estate, which is property that is used for farming. It includes, among others, farmland orchards, vineyards, and dairy farms.
In this post, real estate should be understood to mean mostly property that is used for living. Residential real estate includes single-family homes, townhouses, condos, and apartments.
"And just how can you make money in real estate", you ask? Well, there are several, but today, I will share with you just a few of them.
3. How to make money in real estate
From buying distressed houses, renovating, and then "flipping" or reselling them at a profit, there are various ways to make money in real estate. My SIX best include
- Fix and flip (i.e. finding a distressed house-the home of someone in financial difficulties, motivating them to sell it to you, renovating/fixing it, and then flipping/selling it for a profit).
- Contract flipping (i.e. acting as a middle-person or go-between for a distressed seller and motivated buyer in return for a commission).
- Long-term buy-and-hold residential (this is how Chandler David Smith started. Read his story HERE)
- Vacation rentals (i.e. managing the vacation homes of absentee landlords for a commission. Ideal for high-volume tourist areas)
- Short sales (i.e. purchasing a house from a homeowner whose house is behind on mortgage payments before foreclosure)
- Lease options (ie. leasing a property with the option to buy at a pre-set/fixed price at which you can later purchase it)
4. How to invest in real estate?
Taking more than just an interest or commission and putting or investing your own money in an item of property in anticipation of a rise in its future resell price. For example, buying a building or house in a new upmarket residential area or commercial hub is considered investing in real estate.
There are several ways to invest in real estate. SIX of some of my best include
- Residential and commercial real estate development (putting together and investing money on developing residential and commercial real estate projects)
- Hard money lending (i.e. lending money for real estate purposes at high rates to people who ordinarily would not get access to credit.)
- Taking advantage of arbitrage (purchasing property that has a quickly rising value because of a pending development in the area)
- Purchasing luxury real estate as a hedge against inflation or a way to store value.
- Purchasing real estate investment trusts (REITs), mortgage-backed securities (MBSs), mortgage investment corporations (MICs), and real estate investment groups (REIGs) are investment alternatives within the real estate sector.
However, before you consider committing your money and investing in real estate, you should get advice from someone with the right knowledge and skills.
Right off the bat, what we can caution you about investing in real estate is that, beware-it is a complicated and a time-consuming business. There are many things to keep in mind before investing in real estate.
Firstly, it is important to do your research. Location, research is key. Research your local market and local and national economy. Investigate the school districts, crime rates, and any other potential risks.
To get an idea of what your intended investment property could be worth, research comparable homes/properties in the area-what homes are selling for. This will give you an idea of what you can sell the property for and your profit margin-how much money you can make on the sale.
Once you have done your research, it is time to decide on a strategy. The first option is to buy and then rent out. The advantage of this strategy is that you will be making money on the rental income. The disadvantage is that you will be taking on the risk of a tenant not paying rent or damaging the property.
Option two is to buy and then sell. The advantage of this strategy is that you will make money from sales. The disadvantage is that you will be taking on the risk of the property not selling and having to pay a mortgage.
So, while investing in real estate is a great way to make money and secure your future, like any investment, it comes with its real risks. With Chandler David Smith on your side to hold your hand, making and investing in real estate needn't be risky.
Contact us TODAY for practical, personalized, professional and profitable guidance!!
You won't regret it.