How to make money in real estate boils down to your business plan, real estate strategy and most importantly, the execution.
Without proper goals and direction, real estate investors won’t reap the full-fledged financial potential in the long term. And to scale your business in real estate, you must be fully informed of the current market conditions in tandem with acquiring the basic foundation and education in the field. We are not suggesting you go back to school; thanks to the web, learning is free and won’t break the bank. But, do take real estate investing seriously and invest your time to learn and read blogs to stay up to date with the latest trends, news, and advice on the best practices in real estate.
Related: You’ve Found the Most Profitable Investments in Real Estate in 2018: Here’s Why
How to Make Money in Real Estate in 9 Steps
1. Decipher the best real estate strategy aligned with your financial resources
There is no manual on how to make money in real estate, but setting goals and having a clear direction is the first step. Have a business plan, don’t invest on a whim, and seek professional advice if deemed necessary. Successful real estate investors hone in on an optimal rental strategy aligned with their financial resources as well as their long term objectives. How much money do you want to make? Will real estate investing be a primary or secondary source of income for you?
Figure out what it is you want to achieve from real estate investing and formulate your business plan accordingly. Once you know what you want and have a direction, making decisions becomes much easier. If you are starting out, find a mentor or advisor who’s been there, done that. This will not only accelerate your learning but it will enable you to make smart decisions faster to grow your wealth and achieve your objectives in less time.
2. Use online real estate platforms to find the best real estate investments
The internet affords you an abundance of free resources to learn and acquire the right information to make better-informed decisions to grow your business. You can come across an infinite number of blogs and websites giving out free information on the best practices/tactics to make money in an efficient and cost-effective manner.
Take advantage of online real estate platforms like Mashvisor.com to streamline your search and help you hone in on the most profitable real estate investments in a matter of minutes. Mashvisor affords real estate investors with access to Traditional and Airbnb data analysis and interactive investment property tools.
How to make money in real estate using Mashvisor
- Optimize rental income strategy
- Understand markets on a macro level
- Assess investment properties on a micro level
- Save time
3. Location is a deal breaker
Do not neglect to choose the right area for maximizing your rental income; location comes first when deciding to buy an investment property. An optimal rental strategy capitalizes on a prime location in a good neighborhood near important amenities i.e. transportation facilities, parks, schools etc. How to make money in real estate is very much tied to location. If you buy a rental property in a run-down neighborhood, do not expect a steady flow of rental income and do expect a very high occupancy rate. Whereas, if you choose a good neighborhood, you will have better leverage in setting your income and selecting the right tenants. If you are unsure where to invest in real estate in 2018, turn to our blog post here to find out.
4. Conduct investment property analysis
How to make money in real estate is highly dependent on whether or not investors conduct proper real estate analysis. Again, you can forget wasting time compiling excel sheets and use the web for data analysis and interactive investment property tools. A rental property calculator is compulsory to your real estate investment analysis.
Related: How to Be Sure You Are Making Money in Real Estate
5. Use a rental property calculator
As previously mentioned, a rental property calculator is a major prerequisite to make money in real estate investing and find positive cash flow properties with high ROI. Mashvisor’s rental property calculator is must-have for investors who are looking to capitalize on the right investment for the biggest rewards fast.
Mashvisor’s Rental Property Calculator: What Does It Calculate?
- Cash Flow Returns
- Capitalization Rate
- Cash on Cash Return
- Occupancy rate
- Rental income
- And much more. Find out here!
6. Choose your tenants wisely
Your tenants are crucial stakeholders in growing your wealth in real estate. Be very selective and do not rush this process. It might take you weeks to find the right tenant for your rental property. Run background checks and ask for multiple references to mitigate the risk of choosing the wrong tenants. Wrong tenants burn a hole in your pocket and hinder your profit potential in the long term. Remember, your tenants pay your mortgage payments. No tenants, Big problems.
7. Upkeep and maintenance
This needs no further explaining because the state and condition of your rental property is very important when it comes to finding good tenants, maintaining a high occupancy rate, and maximizing your rental income. Keep up with maintenance and repair at all times. If you stay up to date with repair, you keep your costs to a minimum. How to make money in real estate is all about keeping your costs under control.
8. Fulfill your landlord duties or hire a property manager
How to make money in real estate is highly dependent on the landlord. Your job as a landlord can make or break your investment property. Treat your tenants as important shareholders to your business and make sure you resolve their concerns and complaints without making a fuss. If you are not cut out for becoming a landlord, hire a property manager and don’t think twice.
9. Set a competitive pricing strategy
Make sure you set the right rent to reap the full financial benefits of your investment property. You don’t want to set your rent too high or too low, both cases result in untapped earning potential. To solve this, use real estate comps to help you set the right price from the get-go. How to make money in real estate boils down to the effectiveness of your pricing strategy.
Related: Which Real Estate Property Type Works Best as a Long Term Investment?
Conclusion
How to make money in real estate with a single investment property is a feasible financial plan in the short and long terms. If done right, you can guarantee steady cash flow returns on a monthly basis and garner real estate appreciation to reap big financial success in the long term. Treat real estate like a business and make sure every decision you make is aligned with your long term objectives and goals.
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