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 rocket science.
One thing that you should understand is that all businesses work using the same three principles.
1) Purchase a product or service at a set price
2) Sell the product or service at a higher price than it is purchased for
3) Achieve this in a measurable time period
In order to make money real estate investing, there are two basic things you need to clearly understand.
a) How to Buy Real Estate
Real estate 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 buy property for less than market value. Making money real estate investing is both an art and a science but there are repetitive techniques that will help achieve this with regularity.
The first key to making money real estate investing is to learn to buy your equity. Later, we will sell that equity and it will produce real tangible cash. Most new investors think that you make money when you sell the real estate. 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 in excess of 30%. Because of the huge cost of buying real estate, a 30% profit margin for the average investor can be more than a lot of people earn in an entire year. What you don’t achieve in volume you will make up for in the large profits produced by one deal.
If you understand how to buy a product for less than market value and there is a demand for it, you can always produce a profitable business from that venture. Real estate simply works because there will always be a demand for places to live.
b) How to Market Real Estate
The truth is 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 key to making that happen will be in your marketing efforts. Unfortunately, because most businesses don’t understand marketing, this key lesson eludes them. If you comprehend creative marketing techniques, any type of business can work.
Consider the obviousness of this example. Which one of these advertisements is more likely to garner a lot of attention?
123 XYZ Road – 3 Bed/2 Bath
or
3Bedroom/2 Bath Home – Must Sell $1000s Below Market
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?
Of course. If you work smarter and harder, it’s literally impossible to fail. The real benefits though are 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 value combined with good marketing skills will make you successful in any business. It absolutely imperative for you to learn both of these skills and you can make money real estate investing.
January 18th, 2011 at 7:24 pm
I also try to make some good bucks in real estate. I have two friends how earn pretty nice money in real estate investing. The market right now is kind of slow for me, but I hope that it will get better the coming months. And believe me, I will do my best to achive my goals which are high enough. Thank you again for the great information and tips which I found in the site.
January 19th, 2011 at 7:46 am
We all know that there are a lot of money in the real estate investing. You are right that the marketing is the most important thing if you want to make real money. Can you share the biggest profit margin you made after sale? Mine is 18%- Cool:)
January 19th, 2011 at 8:22 am
Matthew we are really looking forward for your new e books and courses. They are really helpful for me and my agents.
January 20th, 2011 at 7:27 pm
James,
We mostly do large multi-residential properties now. (Shameless plug –>) We are putting together a course on it as we speak.
The principles are the same. We just finished a deal that was purchased for $390,000 and resold for just over $1.2 mill. We did put money into it but this came directly from the rents of the building so I don’t consider that part of the equation. All in all, we put away over 300% I guess. Mind you this isn’t the “norm” but if you are consistent with your efforts, largely profitable deals will happen.
September 29th, 2011 at 6:04 pm
Finally, an honest and factual article on real estate investing. The information here applies to ANY business model.
The ONLY way to make money is to:
1. Buy Low
2. Sell High
3. Do it in a time frame that makes sense.
A great example of what I do is…
1. Buy a good used car at a great LOW price.
2. Clean up the used car, wax it, and then SELL IT for $1000 more than you paid for it.
3. Within 1 month you can sell the car if you do it right, list it online, etc.
Repeat as often as you wish = NO BOSS, NO RULES, You run the show and make $1000 or around that profit off each sale… TAX FREE if you only accept CASH like a smart person.
Don’t even get the title in your name, just take the title the seller gave you and pass it along to the new buyer when they take the car.
Get a trailer so you never have to insure the cars or get then titled in your name… You never legally OWN the car, you just make $1000 for selling it.
September 29th, 2011 at 6:12 pm
No questions about it Mark. The same real estate principles apply to cars as well. We occasionally do deals with vehicles as well when we’re in the market but not nearly to the extent that you do. When people expand their minds, these principles work in any business model.
December 24th, 2011 at 6:55 pm
You can make a lot in real estate ,if your willing to really do whats needed . For example, I make no less that 20 % net return on my buildings year after year, and some net 35% return a year cash on cash. Thats without a mortgage.You can do even better buying right and borrowing. Try that in the stock market.
You may have to move to an area where the potential is and roll up your sleeves and work. But it is definately possible.
January 28th, 2012 at 8:30 pm
It seems to me that you make a lot of the money with the mortgages. Since I’ve had real estate I always seem to be cash poor, but when I die, boy will I have a lot of money to spend! Too bad I wasn’t Egyptian!!!