Some people want to invest in real estate for the challenge, while others want to accumulate long term wealth. Still others are in it to strike it rich in the gold rush of finding property. If this sounds like you, you have come to the right place. There are two main ways you can invest in real estate and get rich – flipping homes and rentals. Each type carries its own unique type of risk. Let’s dive into those 2 types in a bit more detail.Get Rich From Real Estate Investing Click To Tweet
- Flipping Homes
The hard part about getting those homes is that there are cash buyers out there you will need to beat out in order to take ownership of the property you want. On the upside, people are happy to have move-in ready homes, saving them from having to do their own work. In areas that are experiencing rapidly increasing home values, you have to move fast, but your investment will be more likely to pay off quickly versus having to wait a while to recover the money you spent on the upgrade. Look for repairs and home costs that will allow you to put in a 15% profit margin when you sell it. This will also mean you will need to research your house’s potential value when you are ready to put it back on the market.
- Rental Properties
This is how most people acquire their wealth in real estate – renting their properties. You don’t even have to be local, so you can buy properties in hotter markets or places that have a booming economy. If you are going to do a long-distance investment, you will need to have a good property manager who will take care of the property in the meantime. This is one of Warren Buffett’s keys to success, and that means it’s a good idea to follow suit.
To calculate how much you can charge for rent, you will need to cover the amount of your mortgage plus any other expenses like your property taxes. You should expect to put down a 20% down payment before you obtain your loan. If you plan to own multiple properties, you can start to use your profits or the equity you have in your first property to help finance your next buy. The cash from the properties should be able to pay off the loan in 15 years or less. If it can’t, the investment is too costly to start and other options should be explored instead.
Then there are vacation homes you can get into to build wealth. Finding homes in popular destinations will almost always assure you steady income during peak seasons as they are short term stays with high turnover, making for multiple tenants over the course of the year.
It is possible to earn just a little extra income off of real estate, or you can get wealthy in the process. It all depends on how you do things, and how much time you are willing to spend on your research. Good luck!