Real Estate is a business with many different parts. Utilizing these different parts effectively can also lead to many different ways to make money. However, it seems that a large number of investors are only focusing on one aspect of the business which leaves a lot of money on the table and not in their pockets. In this article I will describe the top four methods I believe work the best for producing money for your real-estate business.
A very powerful tool that every investor should have in their business arsenal is rental properties. I know they are a pain, but it’s consistent income every month. If your rentals can bring in enough rental income to cover your monthly living expenses plus you can save for a rainy day you are not stressed out to find the next deal.
Instead you are looking to find the right deal. A forced deal or deal out of desperation usually takes more time to sell and often just doesn’t make sense or just seems to not work out at the end when you come to the closing table. The right deal on the other hand is often well planned, sells or rents quickly, and places funds into your account. Here is a link for fair market rental rates across the country.
Wholesaling Real Estate Deals
Wholesaling is a tool many investors don’t put into their real estate tool bags or use as frequently as they should. Selling a house for a quick profit to another investor looking for a rehab or buy and hold property could be a great short term boost to your business. A quick three, four, ten thousand dollar monthly infusion into your business is great for growth and to buffer against unexpected issues and situations which could and will happen. Wholesaling also is a great way to network with other investors in your area. Wholesaling to local investors often leads to building long term profitable relationship with other liked minded real estate professionals.
Rehabbing/Flipping Investment Properties
The third tool we are going to discuss is rehabbing or flipping. Rehabbing is a great way to put a big chunk of money into your business. A successful rehab could bring in ten, twenty, forty thousand dollars into your business or more. Unfortunately, there is a waiting period from acquisition to selling your property for a profit.
However, if you have applied the two strategies discussed earlier, rentals and wholesaling, you will have both monthly residual income and also monthly chunks of cash coming into your business. Remodeling becomes a calculated process to maximize profit and not a rushed sell that minimizes profits. Capitalizing on these three tools in unison allows investors an avenue to remodel, market, and sell the property at the right price to maximize profits.
The combination of rentals, wholesaling, and rehabbing is a win-win, not to mention if you are wholesaling you are constantly looking for deals. One of your wholesale leads could be too sweet to sell to another investor and could be your next rehab project. A constant pipeline of deals allows an investor to wholesale, keep the rehab train moving, place cash into their bank account, and most importantly grow their business.
Owner Financing/Seller Financing Your Deals
Owner Finance or offering Seller Financing is one of the most advantageous long term tools an investor can use to grow their business. Owner finance allows you to get a lump sum injected into your business, via a buyer’s down payment, and a month income, because the buyer is paying their monthly mortgage payment every month. The ability to get a lump sum of cash and monthly payment is a huge advantage compared to rentals and the fact that there are no repairs you need to complete.
They are buying the house not renting it. However, both methods are good for producing monthly income. The point is we all need residual income. Having guaranteed income will always clear up your thought the process when it comes to acquiring a new deal. Nothing beats the ability to know you don’t have to buy or do a deal this month to pay bills. However, you understand the more deals you can do successfully the more healthy your business will be, and that is the goal.
Real Estate Investing Is Not a One Trick Pony
In closing your real estate business needs more than one method to grow successful. There are many other methods and strategies to use in combinations that were not illustrated in this article. Some of them include pre-foreclosures, short sales, note buying just to name a few. When getting started in real estate investing, the point of this article is to solidify a monthly income via rentals and or owner finance and bring in chunks of money into your business via wholesaling and rehabbing. Also remember to constantly be marketing your business. If no one knows who you are how can they do business with you??
As always thanks for reading and successful investing!