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"Ninety percent of all millionaires become so through owning real estate."
Andrew Carnegie
Real Estate can profit HUGE returns, but you don't have to be an agent... just start a real estate fund!
What types of real estate are out there? And what's the best route to take??
We'll let you in on a couple of our real estate hacks!
Real Estate includes tangible, physical assets. We can leverage these assets by creating funds, increasing the value, then paying out.
Buy and Hold
This is by far the most common property. Leverage some debt and increase your net worth! Make money from both appreciation and rental income.
Pretty self explanatory, right?
Fix and Flip
The first type of real estate is Fix and Flip. Have you ever watched "The Fixer Upper"? Yeah, those guys!
But you don't have to be Joanna Gaines to make a great return on fixing up houses...
Pros
- Easy to do: You don't even need a college education!
- Hands on: Sick of the office?
- Low cost of entry:
- Upfront Equity: Although initially there is perceived equity, it's not for sure until you are able to sell the house at an increased price.
- Quick turnaround: This isn't one of those things you'll be waiting 10 years for a return.
Cons
- It's a job: It takes a lot of time and effort.
- Uncounted variable costs: Examples of these costs could be finding mold or other problems with the bones of the house. They can really kill a deal!
- Tough to Scale: It can be difficult, especially by yourself! It requires a team - then it�s do-able.
- Market Dependent: The housing market fluctuates constantly... but catch it at the right time and it can pay off big!
Lease Options
"A lease option is an agreement that gives a renter a choice to purchase the rented property during or at the end of the rental period."
The buyer and renter make an agreement of a certain price upfront, and then the renter is expected to pay at the later date.
The renter pays a little more than the standard rental payment every month to go towards the down payment. It's a rent-to-own!
Pros
- Rental Income: Constant incoming cash flow doesn't sound half-bad, huh?
- Collectable Down-payment:
- No Property Maintenance: The tenants are doing all the work for ya!
- Tax Savings:
Cons
- Upfront Sales Price: As property appreciates, you, as the owner, are losing money.
- High Failure rate: Renters leave often...and when they do, it's your responsibility to find new tenants. Darn.
- Predatory:
House Hacking
House hacking comes in many different forms. Essentially, house hacking is where you repurpose a home.
This can include making your house into a duplex, or buying a single family home and repurposing it depending on the number of renters. Landlord's usually become a part of the process as well.
Pros
- Rental Income: Again, passive income is the best kind of income.
Cons
- Landlords: They're another expense, on your checkbook and time.
- Requires Teams: Someone's got to renovate the house. Repurposing multiple homes will take outside contracting.
Distressed Sales
Distressed sales is when borrowers can no longer make their payments. This usually happens when there's divorce, foreclosures, relocations or other emergencies occur.
Sellers need quick assets so they sell it below market value...This could be to your advantage if you buy, then turn around and sell it at a higher price!
Pros
- Purchased at LARGE Discount
Cons
- Requires Specialized Skills: To make a considerable profit in distressed sales, you need to know what you're doing and have the ability to move quickly.
- Heavy competition: With more competition, prices are driven down lower than they originally would be.
- Market Dependent: Down markets are great for you. Up markets... not so much.
Overall, there's lots of money to be made in the real estate market and multiple options of strategies to follow. Find your niche and go for it!
There are pros and cons to every decision in life, but the only way you're gonna know if it works for you is by taking that first step.
So these are only a few - but there are SOO many more ways to get involved!
If you have any other questions, feel free to contact me!
Thanks for the read!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
