Secret Ways to Make Money in Real Estate – Part #2

In my last post of secret ways to make money in real estate we talked about a variety of ways to make money in real estate which most people are not aware of. This post is part #2 of the series and I will discuss a couple additional methods that you could potentially use in your real estate investing strategy.

Now these methods are more suited for seasoned investors that have a good understanding of how real estate investing works. I’d recommend getting a few properties and at least three years of real estate investing under your belt before considering these options.

  • Property Management – once you learn to manage rental properties, you can do it for other people. Property managers charge anywhere from 5% to 12% of the gross rents, plus various fees. Essentially you would need to hire a team of people to work for you to take care of the day-to-day work while you oversee the business. Continue reading Secret Ways to Make Money in Real Estate – Part #2

Secret Ways to Make Money in Real Estate – Part #1

Today I’m going to talk about the many different ways you can make money in real estate. Before you get started with investing, it’s a good idea to know all the different options you have besides just buying a property and renting it out.

When I first got into real estate, I thought there was only one way to make money — borrow money to buy a property, fix it up, and rent it out. The tenants would then pay my debt and expenses, and the property would just appreciate. Now you’re probably asking what’s wrong with that? Nothing, and that’s how I have purchased and maintained a majority of my properties but I still wanted to familiarize you with the many different ways to make money in real estate.

The following list will give you a variety of ways to make money in real estate which most people are not aware of:

  • Rehabbing Properties – this is the primary way most real estate investors purchase property. This is what I primarily do and highly recommend hiring a property manager so you’re not involved in the day-to-day details.
  • Wholesaling – this is kind of a sneaky way to make a quick buck on a property that somebody else is already trying to sell. You basically become the middleman by finding a good deal and going under contract and then advertise it for more money that you are paying. I am not a big fan of this method even though the buyer and seller’s are both happy with their purchase and sale. To me it seems like you’d have to tiptoe around because if the buyer ever knew what you were doing he’d be pretty upset. Continue reading Secret Ways to Make Money in Real Estate – Part #1

5 Must Have Home Valuation Websites

There are many new websites popping up like and which claim to give you a pretty good estimate of what your home or even your best friend’s home is worth. The technology out there today allows such sites to do this and are pretty impressive compared to the old days where you’d have to go around reading newspapers or speaking with real estate agents to find out what neighborhood homes typically sell for.

Here’s a quick list of the top home valuation (or home tool) websites I’ve recently come across listed in no particular order: Continue reading 5 Must Have Home Valuation Websites

Who Else Wants Six-Figure Freedom?

When people get started with their real estate investing, they dream of creating a six-figure annual income stream, but deep down many of them have doubts that they themselves can make it happen. Understand that they’re still going to be naysayers out there, people who say you can’t do it in today’s market or in today’s economy. But you do have a choice. You can either believe what these financially stressed out individuals are preaching to you, or you can go outside your comfort zone and chase after the future you want and deserve.

Now tell yourself that you’re going to stick with it until you succeed. You are going to keep learning from your experiences and those of other seasoned investors until you succeed. You’re never going to take even a moment to talk with naysayers until you succeed. Then you’re probably not going to say a word to them; instead you’ll just smile. Continue reading Who Else Wants Six-Figure Freedom?

Should You Sign Foreclosure Deeds Alone?

I’ve personally never invested in a foreclosure deal so I’m only writing about this based on a story I heard from someone else. It’s tough enough to find a gem like this but if you do, here’s how to play it out.

So you’ve stumbled on a piece of property and the owners invite you to come over and during the second cup of coffee they make a deal that can’t be beat. The only bad thing is that they are leaving town tomorrow and won’t be back for a closing for three weeks. Being desperate, you reach into your bag, pull out your laptop and printer and do a self-prepared deed and close the deal right in the kitchen. Continue reading Should You Sign Foreclosure Deeds Alone?

Tax Advantages of Real Estate

The tax advantages of real estate are staggering. You can own a rental unit, collect rent, pay operating expenses and loan payments, and come out with a positive cash flow, and then still get a tax break. When you own rental real estate, or even if you just buy and sell properties, you are classified as being self employed. You are also allowed to deduct operating expenses, which further reduces your income for tax purposes.

Been self-employed is one of the greatest tax savings tools that exist. You are able to shift a lot of your regular living expenses into the area of legitimate tax deductions. Of course, along with the advantages of preferred tax treatment, appreciation, and leverage, there is also monthly income that can be made, using a few simple methods of buying, renting, managing, and selling.

The Advantages of Buying Single-Family Homes

Nearly 80% of all real estate transactions take place in the lower — middle range of house prices. Specifically the average home in this range is a three-bedroom two bathroom house with a carport or garage and approximately 1100 ft.². Why are these bread and butter houses such hot sellers? Because they are the transition houses for people moving up and down the financial ladder of life. They are usually the starter homes for up-and-coming couples and May are the lifelong homes for the blue-collar backbone of America.

This area of real estate investing has several advantages. First these units represent the bottom end of the housing market. The sale prices are low the down payments are usually low, and the demand is high. These homes can be diamonds in the rough. By putting in some minimal fix up and cleaning, you can resell them at a fantastic profit.

An example would be somebody like John who buys single-family homes around $200,000 and renovates them. After he fixes up the homes he rents them out at an excess of $1850 per month. If you run the numbers, these homes are cash flow positive and slowly paying down John’s monthly mortgage. Now John can either hold onto the single-family homes and benefit from the rental income stream or you can try flipping a single-family homes to other investors and make a profit.

The Many Advantages of Rental Properties

Rental properties — small apartments and single-family homes that you rent out — are good investments because there is always a shortage of housing, and there are always people who can afford to rent but cannot afford to buy a home. Because of the high price of home ownership, and the fact that it is generally undertaken with borrowed funds, there will always be renters, those who are afraid of the financial obligation or unwilling to leverage themselves into ownership.

The main advantage real estate offers is leverage. Using a small amount of money — or even no money, in a few cases — you can buy real estate worth tens or hundreds of thousands of dollars. The second advantage is the price appreciation that occurs in real estate, whether it is through inflation, or fixing up, or just the fact that buyers and sellers are working in an imperfect market, usually with only a hazy knowledge as to the real value of property. This is even truer and absorb show in markets where the job growth is filling every single vacant rental property.

The house that you bought yesterday for $60,000 may be worth $65,000 to another person. Find that person, and you’ve made $5,000. Price is also boosted by the simple law of supply and demand. The supply of housing is growing slowly, and the population is mushrooming, through both the constant flow of immigrants looking for a place to live and our reliance in the old fashion way of enlarging our own families. As long as demand for housing continues to outrun supply prices will keep going up.

Other factors that affect the price of real estate are the general economic condition of the community, the condition of the surrounding neighborhood, the actual condition of the property, the financing terms, the time period involved, owner financing, down payment, and other factors.

Real Estate Investing Step #1 – Goal Setting

The number-one determinant of your success in real estate investing is your desire: your motivation as reflected in your goals and your plan. Many people think success in real estate investing hinges on your understanding of contracts, laws, and financial concepts. I don’t believe that. The most successful people I’ve met have a lot of desire.

As a matter of fact, many of the super successful investors actually don’t know everything about real estate investing. Many aren’t familiar with a lot of the concepts related to real estate such as wholesaling, lease optioning, limited liability companies, advanced analysis, or different types of contracts. They simply have a lot of desire; they go out and make things happen; they don’t worry about it — they just keep working their action plan. When I started in real estate investing, I didn’t know these things either. But I did enough activities to experience enough successes.

The most important part of your real estate investing career is desire and motivation — whether you’ve been in real estate for 10 years, just starting out, or you’ve spent the last 10 years just thinking about getting started.

Now it’s your turn. Write down what motivates you. Remember, there are no wrong answers.

  1. Why are you interested in real estate? – Is it to make more money, be your own boss, become financially independent, be able to take more vacations, get rid of your boss, create wealth for future generations of your family, build a retirement savings, make up for losses in the stock market?
  2. How much money do you want to make? – Now be realistic, if you’re just getting started. Maybe you want to make an extra 20000 and 30,000 or even just 5000 extra a month.
  3. What will you do with that money? – Pay off some debt, take a trip, purchase a toy, invest in the stock market, work part time, write down what difference that would make for you and your family.
  4. What will be your motivating factor? – A picture of a beautiful island off the Pacific ocean, a brand-new Ferarri parked out front of your three car garage mansion, or that 5 carat diamond Tiffany ring your wife has been dreaming about?now take whatever that motivating factor might be and put a picture of it on your desk and look at it every day, determining that motivation will remind you of why you’re getting into real estate.

Remember, your #1 determinant of success is your desire and your motivation. This visual reminder will encourage you weeks down the road. If you’re having a bad moment, don’t get frustrated. Just reread that card with your goal written on it and look at the picture of what you want. You’ll quickly be motivated again to keep on going. It will reignite that fire.

5 Major Advantages of Investing in Real Estate

Did you know that only 5% of North Americans are financially independent when they reach retirement age? The other 95% are dependent on friends or families to make ends meet. If you envision a comfortable lifestyle during retirement with the proceeds from your Social Security checks but don’t manage to save a good portion of your income before retirement, you’ll definitely need another plan if you expect your social security checks to maintain your lifestyle later in life. You’re going to have to either continue working well past retirement age or have an extreme leading meager lifestyle until your death.

So now that you know the bad news about the majority of Americans, I’m going to help put you in that small 5% category. Below are my top five reasons why to invest in real estate:

1) Appreciation
Real estate values have experienced a steady increase in value for the last several years. This appreciation is due to the overwhelming demand for real estate. Besides serving as a basic human need for shelter that everyone on the planet must satisfy, several other factors are working to increase the demand for real estate.

2) Leverage
Leverage the use of borrowed funds to finance the purchase of an asset leverage basically allows you to use other people’s money to buy more properties. Real estate investors use leverage to increase their purchasing power and finance investments that they cannot pay for otherwise. Leverage also allows investors to earn a higher return on their equity. For example, leverage allows you to buy a $1 million property with only $200,000 down. How else could you buy a million dollar asset for 20% down? Try duplicating this type of purchase with your company’s 401(k) program or buying stocks in the stock market. You just don’t have the same type of leverage that you do with real estate.

3) Tax Savings
If you acquire the right properties at a good price and manage them while your rental properties generate a positive cash flow you’ll be qualified for substantial tax write-offs including depreciation. They might show a paper loss for tax purposes. Let’s say a property generates $1000 a month and positive before tax cash flow (cash flow before taxes = gross operating income – operating expenses, debt service, and capital additions) you would pocket $12,000 a year. Well, let’s assume the depreciation amounted of $15,000 for the same period. Not only would you show at $3000 paper loss, you’d actually avoid having to pay taxes on the $12,000 gain for that year.

4) Freedom
Although some management and record-keeping are required, your time commitment can be minimal compared to that required by most other businesses. If you invested in a software company, consulting firm, coffee shop, or bakery, you would be married to the business and you would have to dedicate many long hours to its success. Real estate investing can be done (at least before you create an expansive empire) without too much interference with your current job.

Most of the heavy lifting of real estate investing is done in the beginning when doing research and property selection. Once the neighborhood has been selected a house or apartment building purchased, and all units rented, you simply need to field phone calls from the property management company. Unlike a regular 9-to-5 job, my properties continue to make money for me regardless of whether I’m physically there are not. I’m not saying that you should become an absentee landlord, or that you neglect your properties. However, you don’t need to spend 10 hours a day to properties watching the grass grow as is expected that most traditional day jobs.

5) Pride of Ownership
Last and not least, but in my opinion, one of the most important aspects of real estate investing is being able to know that you physically own a building and are responsible for people’s shelter. Just like Donald Trump — real estate means power, let it be your own personal residence or the 24 unit apartment building you just purchased. Unlike owning a stock, a property is a physical asset, and you can go to bed feeling good about owning something that most likely will appreciate in value and you can physically go stand in front of and look at and say this is yours.

Once you understand the major advantages of investing in real estate, it is easy to conclude that very few if any other investments can match it. It is the principal means of wealth accumulation for financially independent individuals. I challenge you to become part of that small 5% that are financially independent when they reach retirement age.