Ways To Make Money

Real Estate Investing Course - Lesson Eight

Real estate investing is an endless topic. There is land, apartment buildings, homes, commercial buildings and more. Whatever the type however, you'll make your money in some of the basic ways listed below. Use this list to get yourself thinking of the possibilities.

1. Appreciation. Money in real estate can be as simple as holding on and waiting. To really get the most appreciation in value, however, you should buy in an area where demand is growing faster than the supply. Also, buy on the side of town that is expanding.

2. Depreciation. Remember that after all the tax law changes, you still get to declare a loss for depreciation that doesn't really exist. That can save you a lot at tax time. To maximize this, buy property that has its value primarily in the buildings, because you can't depreciate the value of land.

3. Loan pay-down. You gain equity with every payment you make. Get the lowest rate on your loans that you can and more of each payment will go towards the principal.

4. Cash flow. When you buy income property the right way, you not only have your tenants paying all the costs and paying what you owe, but you also have positive cash flow. Also, you have more with time, because while payments don't go up, the rents do.

5. Buy low. When you buy below market you get instant equity that will be converted into a profit when you sell. Offer a reason for the seller to sell low: fast closing, cash, assume some debts or liabilities, etc. Or just make a low offer. The seller may have his own reasons to sell it cheap.

6. Sell high. Clean it up nice, make it easy to buy, and find the right buyer to get top dollar. The next four on the list cover ways to create value, so you'll get more when you sell.

7. Make it easy to buy. You can often get substantially more for a property if you let the buyer make payments to you. This is especially true if you let someone buy it with little money down. You can also get good interest on the loan. Alternately, you can sell it this way, and then sell your note for cash.

8. Change uses. If there is a higher use for the property, you can convert it to make it worth more to the next owner. Sometimes this means making condos into apartments, or apartments into condos. Maybe converting a home into office space will get the biggest return.

9. Improve and repair. Repairing anything that needs it is obvious, but you need to look creatively and carefully to find improvements to make. Concentrate on those that will raise the value several times more than what they cost you.

10. Sell in parts. In real estate, the parts are often worth more than the whole. For example, splitting off an extra lot to sell for $30,000 will rarely decrease the value of a home by that much, so you'll make more money in the end.

Real estate investing can be a wonderfully creative process. Just look at the sources of profit listed here, and think of how you can use a few of them on your next real estate investment.

Steve

P.S. The next lesson will let you in on the common "dirty tricks" that sellers of income properties use to get you to pay more.

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Make That Offer | Ways To Make Money