Ask the Real Estate Agent: How Do I Make Money Investing in Real Estate?

by Dan Lesniak

Real Estate Investing

 

Real Estate InvestingRecently, I’ve been receiving questions from buyers asking about how can they make money investing in Real Estate. Here are three strategies that you can use to make money investing in real estate:

 

Buy and Hold

The first and more traditional way of investing is a strategy called Buy and Hold.

Using this strategy, you would buy a house and then rent it out. It could be bought as a property that you live in or bought as an investment property. Usually, the banks are more favorable with loans terms if you actually live in the home. But if you have access to more money to put down, you can purchase the home as an investment. The interest rates may be slightly higher if you purchase the home as an investment.

There are two ways to make money with the buy and hold strategy.

The first way is the appreciation of the home’s value while paying down the mortgage. You will make money along the way when you sell it or do a cash out refinance. The second way is cash flow. For this way if your monthly expenses (principal & interest, real estate taxes, homeowner association or condo fees and maintenance) is less than the rent, then you will have positive cash flow every month.

Buy and Flip

With this strategy, you buy a home to renovate (minor or major) or buy a complete new construction. There is a bit more risk then the buy and hold strategy. But, with more risk can be a even bigger return. The financing does change with the buy and flip strategy. Banks will require more money down for financing because you will have to finance the purchase of the home as well as the construction. Typically, people who buy and flip can make anywhere from 20% to 100% return on investment.

Group Investing/Project Investing

 

This strategy is another form of buy and flip. You can invest in a group for a project or invest individually in a project with a builder/developer. Depending on the project, the initial investment can vary. Investors typically see anywhere from 15 to 30 percent return in one year. The return gets paid out after the main bank loan.

If you have any questions regarding any of this information, feel free to comment below, send us an email at [email protected] or give us a call at 571-969-7653.

 

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