Brace yourself, I am about to tell you something that may be shocking. Real estate is hot. Don’t believe it? What if I told you that real estate is a great investment to earn additional income, and it can be simple. How do I know this? Because I have personally helped clients earn tens of thousands of dollars through real estate investments. And no, I do not own a time machine and I did not travel back to 2005.
With all the current opportunities, I ask myself why people are not taking advantage of these options. My goal is to briefly explain the process of investing in real estate so you can determine if this tool is the right option for your financial interests.
There are two primary reasons that investors typically do not choose real estate. First, they do not understand the true potential, and second, they feel that compared to stocks, bonds, annuities, etc., real estate is just too much trouble and too complicated. In my experience, real estate helps to diversify a portfolio and may give your investment dollars greater impact. This is true even in today’s uncertain housing market.
A real life example:
When you place $15,000 into most investments you receive $15,000 worth of investment. When you place $15,000 into real estate, however, you can receive $125,000 worth of investment. If that piece of real estate appreciates at 10%, you earned $12,500 in investment dollars as compared to $1,500 in investment dollars for your other investment. QUITE a DIFFERENCE!
The next question is what does it really mean to invest in real estate? Let’s look at another example.
I have a client; I'll call him Joe. He takes the opportunities available through real estate to heart. Joe purchases foreclosed homes auctioned daily at the courthouse. I receive a list each day of about 400 homes up for auction the following day. Quite the inventory for making a bundle!! After running comps on select properties, if I feel Joe can make a profit on a fix and flip, I recommend these properties to Joe.
Joe has authorized an associate at the courthouse to place bids on these properties up to a certain amount. If we are successful, we pay cash and receive the deed from the Trustee. I have worked with Joe to secure a great team of trusted contractors. Joe sends his people out to do the necessary repairs and I list the house. We usually make around $20,000 - $25,000 on each property within 90 days. Not a bad return, huh? We also offer financing for these properties, but keep in mind we are not in the lending business so you'll need to put 20% down and get it refinanced when you can.
I hope this explains some of the mystery around investing in real estate. My goal is that you and your family are able to live your dream. Let me know what you think and if you have questions or wonder if investing in real estate is an option for you, contact me.
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