Buying Investment Property How to Make Money in Real Estate: 3 Tips That Work by Nadia Abulatif April 10, 2018April 3, 2018 by Nadia Abulatif April 10, 2018April 3, 2018 Everybody wants to know how to make money in real estate, but not many manage to actually fulfill this. Therefore, here are the 3 most important tips on making money in real estate. Every business has the potential to grow and generate high returns. However, it all depends on the real estate investor him/herself. Only the most successful real estate investors understand it and they were able to achieve the level of financial independence they wanted from the very beginning. So, if you are wondering how to succeed in real estate investing, then check out the following tips: How to Make Money in Real Estate: There are 3 Forms of Making Money in Real Estate In order for you to succeed in real estate investing, you must understand the forms of making money in real estate. In fact, there are three main forms in which you can make money investing in real estate: How to Make Money in Real Estate: Property Appreciation As you already know, when buying investment property, the value of it gradually increases over time. Thus, making it one of the best real estate investments overall. However, it is important to check all the types of property in order to find the properties that appreciate with higher rates. How to Make Money in Real Estate: Rental Income The rental income comes from investing in rental properties. Basically, you buy a property and rent it out to receive a weekly, monthly, or even annual income. This has been the best way for many investors to make money in real estate because it provides them with a steady income that comes in the form of a positive cash flow. Related: Real Estate Investing for Positive Cash Flow vs. Appreciation How to Make Money in Real Estate: Profits Collected from a Relevant Business Well, this type of profits comes in many different forms. For example, one form could be if you are a commercial real estate investor and you have an office building you are renting out. You can make profits through vending machines or parking, for instance. Another way to make profits that come in the form of commissions is becoming a real estate agent. How to Make Money in Real Estate: There is a Variety of Investment Strategies Picking the right investment strategies to work with is very important. The good news is that real estate offers a wide variety of such strategies that you won’t have to wonder how to make money in real estate. One of the best investment strategies is investing in income properties. Rental properties are the most common type of income properties, though. As an investor, you have the choice whether to invest in long-term rentals or short-term rentals. Even though they both provide rental income, we strongly recommend long-term rentals. The thing that makes it the optimal rental strategy is the long-term steady rental income it provides. This way you can ensure that your property is generating income for as long as possible without having to worry about it being vacant. Related: What Does It Take to Become a House Investor? There are also short-term investment strategies that you could go with. The most popular ones are wholesaling real estate and flipping houses. Wholesaling real estate is when you assign a distressed property to a contract and find an end buyer who is willing to buy it for a below-market value. As for flipping houses, thanks to the renovation TV shows, it has become so popular. Investors are more into distressed properties that need major renovations. This way they can apply the concept of forced appreciation as the property immediately starts to go up in value. Therefore, they are able to sell it for a higher price which leaves a margin to cover the renovation costs as well as a profit. How to Make Money in Real Estate: Learn How to Buy Investment Property the Right Way Buying investment property is the tricky part of how to make money in real estate. Therefore, in order for you to be able to make the right choices when buying investment properties, you must know the fundamentals. These fundamentals could make the difference between a successful real estate business and a one that fails. So, here is what you need to know: How to Make Money in Real Estate: Use Predictive Analytics Before Buying the Property A profitable property will eventually help you succeed in real estate investing. Therefore, to determine the profitability of an investment property, you need to use predictive analytics. This will be a great help when making the decision of buying investment property. So, first of all, you will have to perform investment property analysis. This type of analysis helps a real estate investor to uncover the potential of a property. If you are buying rental properties, then it would be a great way to predict rental potential. This analysis depends on calculations based on the money you intend to invest. It calculates the return on investment by computing the capitalization rate as well as the cash on cash return. The second type of analysis is the real estate market analysis. This type of analysis deals with the location and the overall appreciation rate of a property. The process is very simple: you compare your investment property to others that are similar to it. Therefore, it will help you get an idea about the real estate market as well as the potential of the location. Related: Investment Analysis Spreadsheet Has Become Obsolete with the Investment Property Calculator How to Make Money in Real Estate: Check out Listing Websites There are plenty of property listing websites through which you can find many options. Moreover, these websites provide you with the opportunity to view the already-calculated CoC return and cap rate. Of course, Mashvisor has that feature as well. So, you can take the opportunity and check out our listings and view all the data associated with it. How to Make Money in Real Estate Using a Heat Map A heat map is one of the best real estate tools a real estate investor could ask for. Basically, it works the same as any map that helps you find the best hotels or theaters in the area. However, it focuses on showing investors the best places to invest in real estate. Moreover, it helps them find investment properties that have a higher return potential in a certain location. So, if you are interested in learning more about finding the best real estate investments using a heat map, then check out our blog “Investing in Income Properties Using a Heatmap: The Way to Go.” Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL 0 FacebookTwitterGoogle +PinterestLinkedin Nadia Abulatif Nadia Abulatif is an experienced Content Writer at Mashvisor. She was a trainee lawyer before switching to writing about real estate. She is currently doing an LL.M. in Human Rights and International Law. Previous Post The Future of Real Estate Investing: Coliving Buildings Next Post Long Term Rentals vs. Short Term Rentals for Beginner Real Estate Investors Related Posts What to Look for When Buying a Townhouse for Investment Is Dallas Investment Property a Smart Investment Choice Right Now? 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