Tuesday, 18 June 2019
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This Old House - Do-it-Yourself

7 Tips for Making a Smart and Successful Real Estate Investment

Written by Posted On Tuesday, 11 June 2019 05:18

A successful real estate investment can be tricky to obtain, especially with little experience. These tips can help you see where to put your money

The real estate market generates more than $903 billion in revenue annually. If you’re not getting a piece of that action, you’re missing out big time.

No matter what age you are or what your current financial situation is, you can get into real estate. You only need to implement smart investment strategies and you’ll be well on your way to building wealth.

The journey of a thousand miles begins with taking the initial step. If you’re not sure of how to invest in real estate to make a viable ROI, this guide will show you how to.

We’ll explore 7 tips to help you make a smart and successful real estate investment. Read on.

1. Make Money with Rental Property

People will always need a place to live in. They always compare realtors to see who has the best listings at the most competitive prices.

So if you’ve got some cash on hand, you can buy a property and hold on to it for the long term. Try to find an income-producing real estate with positive cash flow. 

This might be a bit hard to come by but it’s not to say that it’s impossible. The current owner could be offloading it for personal reasons or in some instances as part of a divorce settlement.

Before you put down any money ensure you apply the following three principles when purchasing long-term residential rentals: Location, location, and location.

This is what will ultimately determine the ease with which you’ll get a long term tenant. What’s more the asset appreciating value of the property itself is a definite plus.

2. Successful Real Estate Investment: Lease with an Option to Buy

It’s no secret that you have to dig deep into your pockets to purchase a long-term residential property. However, if you don’t have that kind of financial muscle to put up a significant amount of capital then leasing with an option to buy provides a great alternative.

The best part about it is if you don’t have great credit to access asset financing you can still invest in real estate using this option. It works well since you get to agree on a pre-determined price at which you’ll later purchase the property. You’ll essentially be buying it at a discounted rate even after the market price for the property increases.

3. Fix and Flip

The home-renovation culture has exploded in recent times thanks to the popularity of fix-and-flip shows on TV. It’s shown millions of viewers how to make money in real estate by upgrading the value of a property.

However, when flipping a home it’s important to do the right amount of due diligence and cost-benefit analysis. This will determine if you’ll be able to recoup your investment and make some additional money while you’re at it.

If you’ve never done this before you might find yourself on the losing end of the stick if you don’t pick the right project to start with. Once you understand the underlying costs involved and the potential value of the property after you’ve spruced it up, it’s a relatively straightforward way to make a great return from profit real estate.

4. Contract Flipping

Contract flipping is a great way to make money with little to no capital investment or credit required. All you need to do is find a distressed seller who’s desperate to offload their property and a motivated buyer who’s ready to purchase the property at the required price.

Your role is to broker a deal between them. It might be a bit difficult to come across a distressed seller.

However, when you do, you can enter into a contract with them without worrying about having to close escrow on the property. This is because you’ll have located the buyer and the seller beforehand.

5. Short Sales

Short sales, is a situation whereby the existing owner of a property has fallen behind on their mortgage payments but their property hasn’t entered into foreclosure. When you identify such a property, you and the owner get into an agreement where you purchase the home for an amount that’s less than what is owed on the existing mortgage. The return on your investment is instantaneous since you won’t have to spend money on lengthy renovations.

6. Vacation Rentals

Vacation rentals offer a lucrative path to making hefty returns in the real estate market. What's more, you don't even have to own a vacation home to make money from it.

To get in on the action, leverage the existing relationships you may have with homeowners in a tourist hotbed like LA or Miami. You are essentially offering to manage their vacation rentals for them typically on a commission basis. You can then list these homes on popular homestay sites like Airbnb and start building up passive income streams from the homes you manage.

7. Commercial Real Estate

If you have ample financial muscle that you’re willing to flex, commercial real estate development is a modern-day gold mine. You would not only focus on flipping properties but adding value to them as well through renovations and upgrades.

Commercial real estate is undoubtedly the most lucrative source of income and profits in the real estate market today. Office rental and retail space will always be in high demand.

Start by flipping one space and use the profits you generate from that initial project to fund the next one. As you grow, make smart financial decisions and leverage the right partnerships. You’ll eventually find a way to open up shopping malls or develop large-scale buildings.

The Bottom Line

A successful real estate investment has the potential to generate massive amounts of wealth that would otherwise be impossible in any other industry. However, the most common misconception people have about investing in the sector is that you require massive amounts of capital to make money out of it. 

As you’ve seen from the tips in this guide, this isn’t always the case. There’s something for everyone. You just need to start from where you are and grow.

Check out our blog for more real estate-related posts.

Listing Additional Info

  • State: Texas
  • Address: 4741 Carolyns Circle
  • City: Dallas
  • Zipcode: 75212
  • SOLD: no
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tracy handy

Tracy is a full-time real estate advisor and blogger. she specializing in real estate technology .and she would like to write real estate,  home improvement topics.

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