Build your Financial Wealth with
Real Estate
There are a few different ways to earn money with real estate, flipping houses, REIT (Real Estate Investment Trust) and long term sources of passive income through rent and an increase in the value of the property over time.
I have heard it said many times that you make your profit when you buy and you collect your profit when you sell or refinance. What is meant by this is that when you purchase your property, you want the price, terms and conditions to be such that you will have already secured a profit. The price will either be below market value or the terms and conditions of the sale that you negotiated will be such that you will be able to make money on the property.
When your interest is in earning money flipping houses, in order to make the most money you want to look for a property that has been neglected, run down, the worst looking place on the whole block, but is still structurally sound. A property that most people would say is to much work to fix up. Most of these properties can be repaired fairly quickly and resold right away and earn your self a nice profit.
Depending on your interests and your experience you will either fix up these pieces of property your self or hire a contractor to do the work for you. The quicker these properties can be turned around the more money you will earn.
You will not be paying as much in interest costs and your money will not be tired up as long.
There is even a show on the television called Flip This House with Armando Montelongo. He shows you how he has been very successful flipping houses, Armando also has an E-Book out on this subject, if you would like to have a look at it, click here.
Personally I have had more experience with buy and hold real estate rental properties. This method of investment suits my personality better. When you hold your property long term, you are not liable for income taxes until you sell. I prefer to collect the rent, pay the expenses and keep the rest to add to my sources of passive income.
When you buy rental properties that need minor repairs, make the repairs, raise the rent a bit, (the tenants will not mind paying a little higher rent after the repairs have been made). You will then be able to go back to the financial institution with a higher appraised value after the repairs and rental increase, you will be able to refinance and recoup a portion, all or even more than your original down payment.
With this type of real estate investment you will also want to buy at a good price, with good terms and conditions, so your rent from your rental properties will make the mortgage payments, pay the taxes, minor repairs and provide you with sources of passive income.
This is an example of one of my investments with a group I am involved with called Property Team. This is an actual statement to show you what kind of results are possible with this type of an investment.
Return on Investment Summary (1997 - 2007)
Total Initial Investment $11,972
Monies Returned to You + Equity Growth $332,145
Total Return on Investment $320,173
An Average Annual Return of 230.88% (Each year for 10+ years)
Or an Actual Annual Return of 1002.90% (Calculated over the period of time your money was in the project)
Congratulations! Well Done!
There are many books about earning money with real estate in your local book store. Nothing Down, written by Robert Allen is a good source of information.
Between now and the next year I think there will be some good buys on REIT's, because the price of some of these investments have come down. Of coarse you will have to due your due dilligence when purchasing these investments just the same as if you were buying the properties.
You can find these investments that are paying over a 10% annual return. Real Estate is a great vehicle for wealth creation.
I will be discussing in more detail about these type of investments and other real wealth creation strategies in my blog Key2Wealth
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