Regardless of your familiarity with real estate investing, you’ve perhaps considered a venture into it. We’ve all seen the fix and flip shows, the only way to get wealthy is to do that. Or is it? This article shows you how to make money in real estate right now.

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It’s true though! Following decades of social change, industrial development, and economic fluctuations, real estate continues to be one of the most reliable investment options.

The big tech firms do it and accelerate their growth, why shouldn't you borrow money at 4% to get a 900% return on your investment. Real estate investment of. One of Ramit’s students was able to make over $25,000 dollars by selling his art on Etsy. That could be you! Make your memories work for you. Photos can make you a lot of money. For instance, stock photos can range from around $4 to hundreds of dollars depending on the license of the photo, its quality, and the subject matter.

By conducting sound research and taking advantage of favorable market conditions, you can learn how to make money in real estate.

Below you will find several prominent real estate tips to put you on the path to financial freedom.

1. Know Your Investment Strategy

Before laying your cash on the table, know what kind of investment property you’re buying. Is it a multi-family or single-family home? Would you prefer investing in commercial real estate? Each of these asset classes carries varying degrees of risk and return.

What’s your time horizon? How soon will you need the money? If it’s a short-term investment, consider alternatives (having money locked up in a long-term rental property might not make sense). If you’d just like to dip your toe into the water, a real estate investment trust (REIT) might be a better fit.

2. Research Your Real Estate Market

Research is essential. But, some people take planning and consideration to such an extreme that it becomes a stumbling block. Analysis paralysis is your number one enemy in real estate.

At some point, you have to bite the bullet and make a purchase when the numbers make sense. You should be able to estimate the cash flow of a property so that you know when it’s the right time to buy.

Cash flow is all about the amount of cash you get from the investment monthly.

To make this calculation, consider all the expenses and payments associated with operating the property. With a residential rental property, you generate revenue by collecting rent from tenants.

The money you make from rent covers taxes, insurance, payments, repairs, updates, and any other costs associated with property ownership. Money supply is real or nominal variable.

A good real estate investor takes into account all the costs they will incur by owning the property, and weigh them against the potential profits. You may be surprised by just how much it costs to run the property.

In some cases, investors purchase properties on which they can barely break even after expenses.

Calculating your cash flow is a simple equation: subtract your total expenses from your total income. The resulting figure is the amount of money you will generate from your property.

Cash Flow Example

Here is a monthly cash flow calculation example on a property you rent for $1,600 a month:

Mortgage = $600
Taxes = $200
Insurance = $50
Reserve for repairs = $50
Property Management = $100

Your cash flow in this example is $600. This means that you’re building up reserves for future major expenses. And, you can also withstand a future interest rate increase should one come your way.

After you have this number, you can calculate your annual return on investment. This is a percentage rate that tells you how much of your investment you get back annually. You can determine this number by taking your annual cash flow and dividing it by your initial investment.

In the above example, your annual cash flow is $7,200 assuming you purchased a $300,000 property with a 20%—or $60,000— down payment.

Dividing your cash flow by your initial investment reveals your annual return on investment is 12 percent. Not bad considering the average stock market return is 7-10%.

In this example, your return on investment is exceptional. Anything above 15 percent is usually considered to be a sound investment. If you find a property that can get you to an ROI of 15 percent or above, seize the opportunity and buy.

Always be asking yourself if the investment has positive cash flow.

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There are now online marketplaces for turnkey rental properties that do a lot of the math for you.

But since you’re already here, check out the tool Andrew built, Investable, to help you determine your potential rental property’s cash flow.

Investable

Use our tool to find out if you're getting a good deal. Know beforehand what your costs look like and whether your investment will generate cash flow. Just enter an address and it does the math for you. Don't guess the value of your investment, calculate it.

And if you’d like to see Andrew’s approach to turnkey property investing, visit his course Rental Properties for Passive Investors.

He walks you through his exact system for finding (and closing) the right property, what he considers a great deal, and the foundations of a successful rental business.

Want to grow your income with Rental Properties?

Our proven, data-driven approach to building a portfolio of income-producing rental properties that perform in the long-term.

3. Buy and Hold

You’ve probably heard about people who invested in properties or stocks and then lost it all when the economy hit a rough patch. What you might not hear so much about is the fact that these same people may have been able to recoup their losses if they had held out a little longer.

You only lose money when you sell. And, the losses many people suffer in real estate is because they sell at the wrong time.

That’s why buy and hold as a real estate investment strategy is so powerful.

When you pull out of the market at the first sign of a downturn, you lock in your losses. Buy and hold lets you ride out economic shifts. This is essential.

Source: Vizion Group

When you purchase real estate, you should do so with a long-term mindset. As you can see from the above example, buy and hold is an exceptional long-term wealth creation strategy.

Property can effectively diversify your portfolio and earn you short-term profits in the form of cash flow. This is in addition to sustained appreciation over time.

Rental Properties for Passive Investors

Our proven, data-driven approach to building a portfolio of income-producing rental properties that perform in the long-term.

Real Estate Property Always Appreciates

Despite the ups and downs of the market, real estate always has an upward trend. Thus, your investment will likely appreciate in value the longer you hold it.

Source: JParsons.net

One of the most significant benefits of buying and holding real estate is the fact that it gives you a stable income. As long as you keep your rental properties occupied, you can depend on a consistent, pre-determined source of revenue.

A long-term buy and hold strategy gives you ongoing cash flow, yearly tax advantages, and long-term appreciation. As Gary Keller says:

It’s like compound interest with a turbocharger.

This allows you to supplement your income or completely support yourself. As you build equity in your property, you can tap into financing to purchase more real estate and further build your rental income.

4. Get Organized

If you are not on top of things as a property owner, you are going to have to deal with all sorts of negative consequences. Late payments and bills, tenants who can’t rely on you, deals that fall through, and more.

Owning and managing a rental property can be overwhelming. It requires a lot of organization. Taking the time to really get organized is crucial when you’re looking at how to make money in real estate. Below are some good real estate tips.

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