4 Ways to Make Money on Real Estate Investments

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Many real estate professionals use their experience in buying and selling properties to finance a comfortable retirement. "As real estate professionals, we're uniquely qualified to implement various investment in real estate strategies and to see opportunities that many people are never exposed to. Those who don't participate are missing a golden opportunity," says Dan Bohlke of Bell-Key Properties Inc. in Hampton, Va. Consider these real estate investment strategies.

1. Buy and hold for rental income. For the last 14 years, Bohlke and his business partner-wife, Karen, have been systematically buying well-located single-family homes at or slightly below the current median sale price Buying home selling tip for their area—from $80,000 to $120,000. Most are acquired by assuming existing mortgages of former owners or through owner financing. Once the properties are Buying foreclosed home paid off, they generate about a 7.5 percent to 8 percent annual rate of return. That means a $100,000 house that is paid for should florida real estate investment produce about $7,500 to $8,000 a year in spendable cash flow after paying real estate taxes, insurance, maintenance, management, and other fees.

"You need just $1 million in paid-for real estate—or 10 homes costing $100,000 each—to produce a real estate retirement income of $75,000 to $80,000 per year," Bohlke explains. "It self-adjusts upward with inflation, so you won’t be living on a fixed income. And as the properties increase in value, so does your net worth.”

TIP: Buy properties near each other; it’ll make management easier.

TIP: Using a professional property management company to manage your real estate investments creates a liability barrier between you and your clients because the property manager handles all day-to-day operations and assumes a portion of the risks from issues such as lead-paint disclosure and fair housing practices. —Daniel Bohlke, Bell-Key Properties Inc., Hampton, Va.

2. Buy, hold, and eventually sell. Another strategy used by Dan Bohlke is what he calls “the real estate garden concept." Periodic, sequential investing in real estate involves acquiring properties at the rate of one or two per year and then systematically reselling them after 12 to 15 years. "The soil is your local real estate market, the seeds are the real estate properties you acquire, and the fruit is rental and sale proceeds," he explains. "When your crop matures after 12 to 15 years, you can start selling the Free real estate article properties each year in the order of their purchase, using a portion of the proceeds of each sale to reseed your garden (acquire more properties) and using the remainder to live on in retirement."

With this approach, two properties acquired per year and sold after 15 years should produce a perpetual income estate investment real stream of more than $100,000 a year, even after setting aside enough money to continue acquiring two properties per year.

Another choice is to sell off half the properties you've acquired over the years and use the sale proceeds to pay off the other half. This would First time home buying create a cash flow from the remaining paid-for properties as in the buy-and-hold strategy above.

3. Buy and resell. Real estate professionals often have the advantage of Buying a home in long island recognizing changing markets or houses with untapped potential and are able to capitalize by Buying a manufactured home buying low and selling high. Eric Goosen, Goosen Realty Services, St. Clair Shores, Mich., buys two-to-four-unit rental buildings. Because he lives at each property, Goosen’s often able to put only 10 percent down, as opposed to 40 percent or more for investment property. Often he holds the Buying financing home property for two years, so he can take advantage of the $250,000 capital gains exemption on the sale of a personal residence to avoid a portion of the Estate real agents home buying taxes on the sale. Goosen also renovates the properties to increase their value.

TIP: Institute a guaranteed sales program to buy the homes that don't sell by the end of the listing period at your company; it can create a ready made pipeline for new real estate investments. —Bill Watson, Watson Realty Corp., Jacksonville, Fla.

TIP: Don’t take advantage of a buyer’s plight and Buying home loan buy a home at an unfair price. It will damage your business reputation in the community.

4. Build and sell. Developing properties isn’t for everyone, but your market knowledge often helps you identify up-and-coming areas Article estate investment real where in-fill development is justified.

In New Orleans, Bill and GiGi Burk of Burk Realty use a computer-based analysis program he developed to determine the highest cost-per-square-foot price the Buying a home without realtor market will bear. He then compares that cost to the Buying a manufactured home actual estimates for buying Article estate investment real land and completing construction and determines if he can sell the property for a high enough return (15 percent to 25 percent or more) to justify the risk. Equally tough is paperwork and Buying a home in long island patience needed to obtain permits and Buying a new home local zoning approvals. Downtimes in the market are a great time to execute a develop-and-sell strategy, says Bill Burk. “We’ll be ready when the market comes back.”

TIP: You can use pre-tax retirement dollars to investment in real estate through a “self-directed” IRA . All income and expenses from the agent estate real property are paid for by the IRA, but you can make buy and sell Apartment buying home loan decisions with the approval of the account’s custodian.