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Last Updated: Feb 6, 2017 - 2:32:04 PM |
 There is no such thing as easy money or a free lunch, but there is opportunity to make money in real estate even in our struggling economy.
Real Estate Investing really can be as simple as playing monopoly. Your goal is to buy properties, avoid bankruptcy, and generate rent so that you can buy even more properties and make a profit. But "simple" doesn't mean "easy". If you make a mistake, you could find yourself broke or worse… so make sure you do your homework. Remember the money that you will be “playing’ with is NOT Monopoly money!
When you invest in real estate, your goal is to put money to work today and make it grow so you have more money in the future. It has been proven time and again that people can make money by Investing in Real Estate.
The 3 Ways Real Estate Investors Make Money
When you invest in real estate, there are several ways you can make money:
• Real Estate Appreciation: This is when the property becomes more valuable due to a change in the real estate market, the land around your property becoming scarcer or upgrades you put into your real estate investment to make it more attractive to potential buyers or renters. Real estate appreciation can be lucrative especially in Freeport, Grand Bahama Island because we don’t have any property tax. It can also be a very tricky game and is riskier than investing for cash flow income
• Cash Flow Income: This type of real estate investment focuses on buying a real estate property, such as a duplex or apartment building, and operating it so you collect a stream of cash from rent, which is the money a tenant pays you to use your property for a specific amount of time. Cash flow income can be generated from duplexes, well-run storage units, car washes, apartment buildings, office buildings, rental houses, and more.
• Other Real Estate Investment Income: For some real estate investments, this can be a huge source of profit. Additional real estate investment income includes things like vending machines in office buildings or laundry facilities in apartments. In effect, they serve as mini-businesses within a bigger real estate investment, letting you make money from a semi-captive collection of customers.
If you are interested in making money in real estate the first step is to start. First you have to have a job and you have to begin saving money for your first deposit. It does not matter how much you begin saving but you have to begin. I once met a very rich man on an airplane and he told me that I should always remember that a Million Dollars is made up of one million individual dollars and each dollar is made up of 100 pennies. So if you save a penny you are on your way to saving a million dollars. If you waste a penny you are going the wrong way. It was an interesting perspective.
So once you begin saving, go visit the bank and meet with a loan officer to see how much you qualify for. The banks have a formula whereby they take 40% of your monthly income which is the maximum amount of monthly mortgage payments that they will allow. So if you make $400 per week or $1,600 per month they will give you a mortgage with maximum payments of $640 per month. Not counting the deposit which you will save penny by penny this will allow you to borrow approximately $80,000 with a deposit of $8,000 or more based on current interest rates and a 25 year mortgage. The Banks will factor in your credit card debt and service charges etc but this is a rough estimate.
Next step is to do your research and meet with an experienced Real Estate agent to help you find the perfect property that you can afford and that will make you money over time. It is important to buy right because good real estate investors usually make the money on the buy side. Take your time and make sure you negotiate a good deal. Do not fool yourself and stretch yourself too thin. Make sure you budget for ALL expenses including cable, power, water, insurance and maintenance. If it’s a rental duplex or apt the property may not be rented 100% of the time between tenants so you will need cash reserves for that as well. The bottom line is do your homework and plan for the worst and hope for the best.
You can make money in Real Estate just like millions of other people in the world have for centuries. I wish you all new real estate investors good luck. If you have any questions give me a call at James Sarles Realty and I am glad to answer any questions you may have.
Contact the author,
James Sarles at
Coldwell Banker - James Sarles Realty
james@sarlesrealty.com
© Copyright 2013 by thebahamasweekly.com
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