How Do You Make Money Investing in Real Estate?

You know, I’ve probably had more people ask me whether they can make money in real estate than anything else. The truth is that it’s not like it’s rocket science.

One thing that you should contemplate is that all businesses work using the same three principles.

1) Purchase a product or service for a given price
2) Sell that product or service for a profit
3) Achieve this in a measurable time frame

In order to make money real estate investing, there are two very important fundamental lessons you must grasp.

a) How to Buy Real Estate

Property rarely sells for a significantly higher price than it costs to purchase. That means the first step to making money real estate investing means knowing how to purchase property for less than the full value. Making money from real estate investing is both and art and a science so there are techniques that will help achieve regular consistent profits.

The first key to making money real estate investing is to learn to buy equity right at the pruchase. Later, we will sell that equity and it will produce real tangible cash in our bank account. Almost all new investors think that you make money when you resell the property. The truth is that your money is always made when you buy.

Most products and services have an average profit margin of 8% after all expenses are considered. 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 on a single property can be more than a lot of people earn in an entire year. Even if you don’t do a lot of business volume, it will be offset by the large profits produced 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 successful business. Real estate works as a “product” because there will always be a demand for places to live.

b) How to Market Real Estate

Regardless of what business you choose to look at, the truth is that 90% of every business is marketing. Having your properties sell for full price quickly and often will get you paid. Your marketing plan is the key to cashing out your equity. Most businesses don’t understand marketing so this necessary lesson eludes them. Comprehending creative marketing techniques will help you make any type of business work.

Consider how obvious this example is. Which one of these advertisements is more likely to garner loads of attention?

123 ABC Road – 3 Bed/2 Bathrooms

or

Must Sell for 10% Below Market – 3 Bed/2bath

While it may be obvious, look at the different property advertisements and you’ll notice that few people incorporate good marketing into their campaign.

So, can you make money real estate investing?

Obviously. If you work harder while working smarter, the rewards will be worth their weight in gold. The real value in learning this is 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 skills will make you money through investing in real estate. The internet is jam packed with loads of free resources like Investor Today website, CREonline and REI club to help you master these skills.

May the force be with you.