Six Strategies To Making Money In Real Estate

Regardless of what your individual strategy is when it comes to investing in real estate, the large majority of real estate investing strategies fall within these six categories. The key for you as a successful real estate investor is to be familiar with how each of these categories work and what type of market is the best type of market to use these strategies.

Here are the 6 strategies to making money in real estate:

1. – Buy at market value, rent/lease at market value, sell at appreciated market value – This is the most common real estate investing strategy. With this strategy you purchase a real estate property at full market value. Once you have acquired the property, you next find a tenant or tenants (if a multi-unit property) to rent the property to also at full market value. Ideally your goal is to make sure that the amount of money you collect in rent exceeds the expenses related to owning the property. The difference is your profit or monthly cash flow. At some point, hopefully the property appreciates in value which you can then sell the property at a higher price and collect your profit.

2. – Buy at below market value, sell at market value – Using this strategy you purchase a piece of property for below market value. How do you obtain property for below market value? Perhaps the seller is in a tight financial bind and is willing to part with the property. Maybe the house is in terrible condition. Whatever the reason, it is because of this reason that you are able to purchase the property for below market value.

Once you’ve secured the property, the next step is to fix the problem that made the

property below market value to begin with. If the problem was the seller’s, the problem is already fixed once you buy. If the problem was with the house, you must fix the problem with the house before you sell.

Finally, after having corrected the problem that caused the house to sell at below market value you are now ready to sell the property at market value. Since the problem is now corrected you should be able to get full market value for the property. The difference between the price you paid and the price you sold the property for is your profit.

3. – Buy at below market value, keep property – Using this strategy you purchase a piece of property for below market value. You purchase the property under the same circumstances under the circumstances you face under the 2nd scenario. However the only difference is instead of selling the property off, you keep the property for yourself.

Using this scenario, you rent the property out for cash flow. If you are purchasing the property for below market value due to a situation with the seller, you will be able to command the same level of rents as you could if you brought the property for full market value. However, the only difference is that because you paid lower for it, your expenses are lower, which means your cash flow and profit is higher.

Keep in mind not only do you get a larger monthly cash flow; you also get the tax benefits that comes with owning a real estate property. In addition, you also get the

equity that you currently have in the property because of the fact that you purchased the property for below market value. This is an incredible way to purchase real estate if you find the right scenarios in which you can pull this off.

4. – Buy at market value, sell at above market value – Using this strategy you purchase the property at full market value. You then look for ways that you can increase the overall market value of the property. You make the necessary investments to increase the market value of the property and then you sell the property at a price much higher than market value.

Let’s say you find a property that’s a single family residence. However with some slight modifications it can easily be converted into a multi family residence and increase its value by $100,000. The cost to make the conversions is $50,000.

You invest $50,000 to make the conversions. You now create an additional $50,000 in equity. You can now sell the house for the higher price.

5. – Don’t Buy At All – Play Dealmaker – In this strategy you don’t purchase any real estate at all. What you do is find someone who is constantly looking for a stream of buyers for real estate. You then find someone who is constantly looking for a stream of sellers for real estate. You negotiate a finder’s fee, which can be either a flat rate or a percentage of the deal and then you link the two parties together.

Buyers and sellers of large volumes of real estate would gladly pay someone who can find the missing link to what they are looking for. In some cases you only have to make the introduction one time and get paid for the life of the relationship!

6. – Don’t Buy At All – Buy Securities – Securities such as tax lien certificates and mortgages can be purchased just like the property itself can be purchased. For tax lien certificates, you earn a return based on the percentage of the lien. For a mortgage you earn a return based on the interest rate. If the homeowner fails to meet his or her obligation you foreclose and now you own the property free and clear!

The key to executing these six strategies is to know when is the best time and the best type of deal to execute each strategy. If you execute the wrong strategy to the wrong type of deal, you lose money. If you execute the right strategy to the right type of deal, you make money. In some cases, you make a LOT of money.

The large majority of real estate transactions all fall under these different strategies. If you learn to master these strategies you become a truly flexible real estate investor. This is a competitive advantage because you will be able to handle deals other investors cannot, thus creating more profit and long term wealth for you and your family.