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3 Realistic Ways You Can Make Money in Real Estate

Posted by Ken Meyer on Wed, Nov 20, 2013

shutterstock 119999488There are seemingly endless infomercials on TV that promise a quick and surefire way to make money in real estate. For the prudent investor, one question should always stand out about these hucksters, “If they are so good at building phenomenal amounts of wealth through real estate investing, why are they selling DVDs over the air?”

In short, these modern day snake-oil salesmen have no great insight into a good real estate deal and you will simply be wasting your money on their product. Here are the three “tried and true” methods for making money in real estate - all involve real work and some luck but in the long run, they do work:

1. Through Appreciation 

The traditional method – and the one used by most single-family owners – is to buy and hold a property. This method is quite powerful if you have the patience to allow the twin forces of inflation and appreciation do their work.

2. With Rental Income

Buying an additional single- or multi-family home will allow you to collect rent from your tenants to offset your bills and eventually create a revenue stream. This method can be quite time and effort consuming, although there are property management companies that will manage your property for a fee.

3. By Flipping Properties

By far the most popularly perceived method for making money in real estate, this is also the one most fraught with danger. In the heady days of the real estate boom, it seemed that almost anyone could pick up a home, do a little work on it and then turn around and sell it for a profit. Those days are over and flipping a property takes a lot of skill, experience and hard work. Still, it can be done, if you find the right property at the right price.

A Final Note – Always Consult the Experts - The key to successfully utilizing any of these methods is by identifying your goals and your risk tolerance. Once you establish these parameters, you can approach real estate professionals like brokers and private money lenders to find the right deal. The use of professionals may cost a little in the short run but, with them, you can be sure that your deal is legitimate, properly memorialized and secured and, most likely, importantly, profitable.

 

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