The 6 Ways You Can Make Money in Real Estate

So you may be asking yourself… “I want to get make money in real estate but don’t know where to start?”

Well, today is your lucky day!

There are 6 different ways that you can make money in real estate. Some require no money and some require money so there is an opportunity for one. You just have to hustle and be willing to work to make it happen. #noExcuses

Here are the 6:

  1. Realtor
  2. Property Manager
  3. Wholesaler
  4. Flipper
  5. Investor
  6. Lender

Let’s begin…

1. Realtor

working_with_a_realtorA realtor or real estate sales person is the professional one hires to walk them through the process of selling or buying a home. The realtor needs to take classes, pass an exam, and then join the board of realtors in their area. They also need to join a Brokerage such as Keller Williams, Remax, etc.

The realtor makes around 3% of the sale of the home. So if you sell a home for $200K, you will make $6,000. You may be thinking, “$6000 per sale? That is awesome!” Not so fast… before you get that check… you have to pay taxes, yes Uncle Sam takes a piece. Then your broker takes another piece. This can range from 10%-30% of the commission. So whatever is left, is your to keep. Give me the money! 😃

Being a realtor does take a lot of work, especially when you are beginner. You need to be in front of as many people as possible and network everyday. You need to give them value so that they can trust you.

As a realtor, you only get paid when a home closes so it’s all commission-based. Be ready to track your expenses and be ready for good months and not-so-good months as your closings will fluctuate. I highly recommend having some cushion in the bank.

The good news is that you can start by becoming a realtor part-time. You can still have your full-time job and works nights and weekend. I was a part-time agent for about about year and half. It did require a lot of work as there were days were I would go into work at 8 am, meet with clients or show homes during my lunch time, go back to work and continue showing homes after 5pm. I remember one day I worked around 16 hours between real estate and my full time job. But it was worth it!

Later, I quit my job and became a full time realtor. I love it and everyday I am excited to help the families I serve.

If you want to become a realtor, let’s chat!

2. Property Management

property-managerAnother opportunity to make money in real estate is becoming a property manager or opening up your own property management company. A property manager usually charges between 7-11% of the rent of the home to manage it every month. This means that if you charge 10% to manage a property that rents for $1,000 a month, you will get $100 a month. That may not sound as much, but what happens when an investor tells you he has 20 properties and each of them rents for $1,000. That is $2000 a month to you!

Now there are a lot of tasks that you must do as a property manager. You will be taking calls of tenants, scheduling contractors to go and fix whatever just broke on the home.

You are also responsible of finding a tenant when a property goes vacant. Property managers usually charge 50% – 100% of the first month rent of the lease when a new tenant moves in, so this gives you some extra income.

I have 2 properties in Jacksonville, Florida and I use a property management company. This is great if you are an out-of-state investor. For example, the company charges me 9% of the monthly rent. At the end of the month, I get a report and a check of the earnings. The report shows any debits of the month, including the $63 that they charge me for managing the home (rent is $700).

Not a bad deal, huh. You just have to network a lot with investors and make sure you give better value to them than other property management companies.

3. Wholesale

wholesaleWholesaling is a great way to get your feet wet in real estate because it requires minimal money, it just requires your time.

To make money as a wholesaler, you need to find a seller who needs to sell their home for a lower price because you can close FAST and with CASH. The sellers can be people who inherit a home, a couple going through divorce, a family member is sick and needs the money ASAP or they may declare bankruptcy and want to sell it quick.

The wholesaler finds the seller but usually he doesn’t need to have the cash to close. He can ‘assign’ the contract or sell the contract to a third-party, usually a flipper or investor.

For example, you go door-knocking one day and someone opens the door. You ask them if they are interested in selling because you a list of investors who may want to buy their home. They say, “Actually, yes I do, I just inherit this property from my grandmother who past away and I don’t even live in this state. I want to sell it quick!” This is the perfect opportunity.

That house can sell for $100K in todays market. You offer $70K for it and guarantee them they will get the cash in 2 weeks. The sellers agree. You then find a buyer and wholesale the house to them for $75K. At the day of closing, $70K goes to the seller, and $5K goes to you, the wholesaler, for finding the deal.

Not bad huh… $5,000 for finding a deal… that is awesome!

In a wholesale deal, everyone is happy. The seller has their money quick, the investor bought a property 25% cheaper than buying it on the regular market, and the wholesaler is happy with their $5K without having to spend any money.

This a great way to get started. I would recommend meeting as many investors as possible and asking what their criteria is and what their ROI needs to be. This way you can find properties for the investors and you get a piece for finding the deal.

4. Flipping Homes

flipYou can also make money by flipping homes. This basically means that you buy a home that needs work, you renovated and then you sell it for a profit.

For example you buy a home for $70K, put $20K to update and sell it for $110K. This gives you $20K profit when you sell the home.

The key here is knowing how much the After Repair Value (ARV) will be after you renovate the home. Flipping homes does require more work that just investing in property with a buy-and-hold strategy.

Once you sell the home, you collect your check and move to the next one. This strategy is not residual, but you can make some great profits on the backend once you sell the property.

On a personal note, I have no experience flipping properties yet. I may do one next year. Right now I am studying what market and team I want to do it with. Keep you posted if I do one in 2017!

5. Investor

mailboxmoneyThis is when the passive income begins! As an investor, you can buy a home cash or get a mortgage and borrow money from the bank. You will most likely need $$$ to be an investor unless you partner up with other investors and they give you equity for the work you do.

As an investor, investing for buy-and-hold or investing for the long term, your profit will be called your ROI or Return on Investment. For example, if you buy a home cash for $100K and at the end of the year your profit is $10K. Then your Return on Investment is 10%.

Investors have different criteria and may invest in different markets depending on the ROI. For example, I know investors who are happy with an 8% return, while I know other investors who won’t even look at a deal if its not over 15% return.

It is very important to determine what your ideal ROI is. Your job as an investor is to look as many deals as possible with your ideal ROI. You can get these deals from realtors, house flippers, or wholesalers.

As an investor you can invest in Single Family Homes, Duplex or even Apartment Complexes. When you do it right… you will have checks in your mailbox every month! #passiveIncomeRocks

6. Lender

lenderThis one may be the most passive of them all! You can act as the bank and lend money to people who want to do flips or even want to buy and hold. Right now the banks are giving mortgages to buyers of Single Family Homes for around 3.5-4% (the lowest ever!), however, there are families or investors that can’t qualify for a bank loan so you may lend money long-term for 8%.

If you want to lend to a flipper that needs money to buy the home or do the renovation, then you can give them a hard money loan for 3 months, 6 months or when the project finishes. Right now hard money loans are going for 10-12%, not a bad return, huh. Just make sure that you trust the house flipper and look at their portfolio / previous projects.

As you can see their are various ways to make money in real estate. Some require more time than others and some require more money than others. The great thing is that you can get started NOW!

Which one are you, or which one is your favorite? Let me know below and see how I can connect you with others doing the same thing!

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