Real estate has made more millionaires than any other industry. You may have come across stories of people becoming millionaires in real estate within a short period of time. It has also taken some investors many years before they could make money in real estate. If you have ever considered investing in real estate, you must have asked yourself, “How long does it take to make money in real estate?” This is a question that lingers in the back of every real estate investor’s mind.
How long it will take you to make money in real estate will depend on a number of factors. Let us go through some of these factors.
1. Your real estate investment strategy
How long it will take you to make money in real estate depends largely on how you are investing. There are numerous ways you can make money in real estate. Some real estate investment strategies take a long time while others don’t. Each investment strategy has different characteristics that will determine the length of time it will take to make money. Let’s look at some of the common real estate investment strategies and how long they would take to make money.
Fix-and-flip investment strategy
This is one of the fast ways to make money in real estate. It involves making a profit by buying an investment property below market value, working to improve the property, and selling it at a price higher than the initial investment. These properties are usually foreclosures, short sales or properties in bad condition that need cosmetic rehabs. This type of real estate investment strategy is not a scheme to make you rich overnight. However, if done correctly, real estate investors can quickly profit from flipping properties.
Real estate wholesaling
Wholesaling is also another great option if you want to make money in real estate fast. This strategy allows property investors to make money quickly while spending little to no money. A wholesaler looks for distressed sellers, convinces them to sell their property below market value and write a contract for the deal, and then finds buyers to sell the contract to. The wholesaler earns quick money for closing the deal as a middleman between the seller and buyer. The wholesaler doesn’t own the property and, thus, is not responsible for any mortgage payments or repair costs. However, to be successful with this real estate investment strategy, you have to be good at networking to get information on potential sellers and buyers.
Owning a rental property is a good long-term investment. You can start generating positive cash flow from long-term rentals or short-term rentals while the value of the property increases with time. With property management, you can have passive income and also build wealth. However, even with steady positive cash flow, it would take a long time to get back your money from a rental property.
In fact, with a buy and hold real estate property, it is going to take you several years before you see your profits. Your aim will be to make money in real estate by selling the investment property after appreciation. This may be after several years. Appreciation of your investment property will largely depend on your location. Some real estate markets tend to shoot up in value quicker than others.
You can use a rental property calculator or Airbnb calculator to get a good estimate on your ROI and potential revenue on a rental property.
2. Your real estate knowledge and experience
You are also a key player to the length of time it will take to make money in real estate. Your knowledge and skill level in real estate investing will play a big role in how long it will take you to make money in real estate. Just like in any other business, it will take much longer for a beginner investor still learning about real estate investing before they make money.
If you want to hasten your money-making process, you will have to educate yourself. With real estate education, you will be able to make informed decisions and much faster. You will also be able to avoid some unnecessary mistakes that could delay your profits or even be detrimental to your business.
Before deciding on any real estate investment strategy, you need to research and study it thoroughly. This will be the first step to making money in real estate. You may try out the best ways to make money in real estate but without understanding them well, you are doomed for failure. Research the details of your investment strategy and make out whether or not it will help you meet your goals.
Be sure to use Mashvisor’s blog to learn more on how to make money in real estate.
The Bottom Line
How long it takes to make money in real estate will depend on many factors, including your real estate strategy, skillset, determination, and experience. Even though most investors consider real estate to be a long-term investment, you can also invest in real estate for fast short-term gains using strategies like wholesaling and flipping real estate. If a property is re-sold instead of rented out, then the return on investment will be quicker.
If you want to get a specific time-frame for potential returns, you can perform real estate investment property analysis using online tools. For instance, you can analyze and calculate the returns of an investment property using Mashvisor’s real estate investment calculator. This tool will give you access to investment properties with high returns in the area of your choice across the United States.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Nonetheless, don’t just pick a real estate strategy just because you think it will help you make money in real estate faster. Do your research so that you pick an investment strategy that is best for you. It is also good to be flexible. As you continue learning and gaining experience, you may need to change or adjust your real estate investment strategies so that they align with your goals, economic trends, and the current housing market.