Long Term Real Estate Investing - Rate of Return & Questions

[Lance Frasier]

I'm thinking about becoming involved in real estate investment now that I have free time on my hands. In particular, I want to buy, rehab, and rent out properties (long term holding). Eventually I'd like to get my hands on apartment buildings and commercial buildings.

Anyways, I know that on average real estate appreciates at 3% per year. With that said, the market on average will appreciate at 10% per year. Therefore I know that most real estate investors can not be trying to earn the 3% appreciation per year. That just wouldn't make sense. Especially when they could design a modest ETF portfolio that would provide them with a good chance of earning more than 3%.

So is the goal to buy a property for cheap using hard money, rehab it, refinance the home at a higher valuation, pay off the hard money loan and then pocket the rehab cost plus any gain? Is that where most of the investors are making their money? Buying an asset below market value and raising it to at or above market value?

Thanks