Luck vs. Strategy: Making Money in Real Estate

It sounds simple enough: you finally have enough savings in the bank; you decide “to invest” in real estate by buying your own house; you apply for mortgage under your own name; and then you wait for the value of the property to appreciate. If the above scenario is very familiar with you, then you’re not alone. On the contrary, a lot of people think that way – they equate buying a house with investing in real estate. But is it really?

Remember, at the end of the day, it all boils down to two questions: Did you make money out of the house you purchased? If so, how much money did you make? If your answer to the first question is no, it automatically invalidates the second question. How, then, can you call it investing when you didn’t make any profit out of it? It is sensible to take note that real estate involves a lot more than buying a property and watching out for market trends. Investing in real estate entails avoiding liability, utilizing different strategies creatively, and making use of grants to help you have a nice return on profit.

Real estate as an investment vehicle

It is a universally acknowledged fact that real estate investing is one of the best ways to build wealth and attain financial freedom. That is, if it’s done correctly. Many people jump on the real estate investing train just because it seems to be the trend and they have a lot of cash to spare. But actually, that’s where the problem lies. Just because some investors profit from real estate investing doesn’t automatically mean that you will. Combining high expectations with insufficient knowledge is a recipe for disaster.

Instead of groping at straws and basing your decisions on ungrounded speculations, it would put you in much better stead if you equip yourself with knowledge to make educated choices. Take the time to learn about real estate investing. Associate yourself with like-minded people and find mentors in the field. You’d be surprised how doing so would put things in a much clearer perspective for you.

Misconceptions about real estate investing

If you really want to invest, then you should be aware that real estate is so much more than buying distressed property, renovating it, and selling it for profit; and buying property with upcoming down payment, renting it out, and waiting for the value of the property to increase. Real estate done this way is like taking on another job: it puts more work and responsibilities on your shoulders – but you have no guarantee that you’ll make money in the end.

To minimize risks and raise your chances of earning good profit, you should expand your horizon and be assertive enough to recognize opportunities. You can, for instance, look into agreement for sale, assignments, lease to own (properly implemented), JV, pre-foreclosures, and partial ownerships, just to name some options.

In a nutshell, your potential earning in real estate would be directly proportional to how much creativity you employ in the process. Take note that every house seller has different objectives – and every house buyer has a unique situation. A good real estate investor is in the middle of the picture: finding a solution to the needs at hand, and utilizing creative knowledge to successfully close a deal. Real estate investing is not easy, but it’s also not impossible. With continuous education, a lot of intellectual work, and the right connections, you can actually make it work.

So – did you make money in real estate because you knew what you were doing, or simply because you got lucky?

Written by CanadaREIC Founder:

Jarek Bucholc

Canada Real Estate Investors Club
"Run By Investors for Investors"
http://www.canadareic.com/

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