How Can I Make Money Real Estate Investing?
It’s true that more and more people are continually asking me whether they can make money investing in real estate. The truth is that it’s not rocket science.
One thing that you should understand is that all businesses work using the exact same 3 principles.
1) Purchase a product or service at a set price
2) Sell the product or service to produce profits
3) Complete this in a quantifiable time period
While it may be somewhat “fundamental”, understanding these two lessons are the key to making money real estate investing.
a) How to Buy Real Estate
Real estate rarely sells for a significantly higher purchase price than it costs to buy it for. That means that the first step to making money through real estate investing means you must know how to buy property for less than market value. There are techniques that will help you achieve regular consistent results but understand that making money real estate investing is both an art and a science.
The first key to real estate investing is to learn to buy your equity from the start. Later, we will sell that equity share and exchange it for real tangible cash. The vast majority of new investors falsely assume that you actually profit when you sell the real estate. The truth is that your money is always made when you buy.
Most products only have an average profit margin of 8% after you consider all expenses and overhead. Some more profitable products have profit margins larger than 30%. Because of the large cost of real estate compared with other products, a 30% profit margin for the average investor can be more than a lot of people earn in income from an entire year. You may not do a lot of volume but that’s not relevant because of the large profits per deal.
By understanding how to buy a product for less than the market value combined with having a demand for it will always result in a profitable business venture. Demand for real estate comes from there always being a demand for a place to live.
b) How to Market Real Estate
You have to understand that 90% of any business is marketing. Having your properties sell for full price quickly and often will help you cash out that equity and get paid. The best tool to cash out your equity is your marketing efforts. Believe it or not, most businesses don’t comprehend this valuable lesson because they don’t understand marketing. Creative marketing techniques will allow you to make any business work by fully comprehending them.
Consider the obviousness of this example. Which one of these campaigns is more likely to garner a lot of attention?
456 ABC Parkway - For Sale
or
3Bd/2Bath - 00s Below Market Must Sell
While it may be obvious, look at the different property advertisements and you’ll notice that few people use good marketing techniques.
So, can you make money in real estate?
It should be obvious that of course you can. If you work not only harder but you work smarter too, you can’t fail. The real benefits to learning this are that the skills required to master making money real estate investing are completely transferable. Learning to buy a product with high demand for less than the market’s price combined with good marketing know how will make you successful in any business. Mastering these two skills will make you money real estate investing. There is a ton of information available for free online at resources like The Investor Today, CRE online or REI club to help you achieve your goals
May the force be with you.
