Where is the money in real estate?

Question

Where is all the money in real estate? I've heard stories of people making many many millions. However, everytime I try to find a way to make a lot of money something is wrogn with it. I have been flipping houses and making money but not big dollars. I recently thought an apartment complex was a good idea but lucky for me the BP guys explained to me not to do it rigth away. the overall question is "Where is the money?"

J Scott · Answer

I hope this doesn't sound cryptic, but...

The money is in the knowledge, the relationships and the conviction to take action using that knowledge and those relationships.

Mike McKinzie · Answer

Investing in Real Estate is NOT like winning a lottery.  I started off buying a house for $30,000 and selling it for $50,000 a couple of years later.  Then I bought a triplex for $70,000 and sold it for $100,000 a couple of years later.

Real Estate investing builds up slowly, especially in the beginning.  For at least the first 10 years, you do NOT spend any income from Real Estate, you re-invest it.

It is a slow and steady process.

Account Closed · Answer

I would not expect to make big money without having learned how to make real estate work. Safer to learn and make mistakes on smaller deals so that you can build the relationships, education and experience you need to do bigger deals.  Education isn't enough, for most of us it takes time to develop insights into where, how, why, and with what to invest.

Like any investment or business you need to be well prepared - that takes knowledge and a plan.

Jackie Patterson · Answer

If you're..... "flipping houses and making money, but not big dollars".......then you have a start.  Go for more flips, or bigger flips.  Use the money you make to generate more deals.  Take the time as Charles suggests to gain knowledge, and experience.  You're already ahead of most since you have experienced some success.

Mark N.A · Answer

There is no more money to be made in real estate than in any other area of investing or starting your own business.

For the most part the 'stories' you heard of people making many millions are just 'stories'.

However, there is a very small percentage of posters here on BP who have actually done very well for themselves, and have freely shared their methods.

But no one is going to do it for you.

David Cohen · Answer

The money is in the relationships. Charles is right. Education isn't simply enough. Knowing something isn't really useful without knowing someone.

Another thing to keep in mind, real estate is about gradual and continuous cash flow. The flipping deals gets you some nice chunks of change quick, but imagine having a couple of 50 unit apartments renting out at 500 dollars per unit per month.

Flip = Quick Cash - Pay only once.
Hold = Slow Cash x Months x Years

Tyler McCracken · Answer

LOT's of Good Advice posted above.  Re-read J.Scott and Mike M's posts (even print them all out).  My best deals come from 16+ years of experience of knowing my market and being able to jump (both mentally and financially) on an opportunity when it presents itself.

They pointed out the keys... It takes time.  You have to pay your dues, REINVEST as much profits as possible.  Live below your means and let the power of compounding take hold.

There are two parts to this game.  The business aspect that covers short-term merchandising such as flipping, wholesaling, rehab to retailing, and hard money lending.  These in theory are all short term transactions and typically fully exposed to taxation as any business would.

Then you have investments characterized as long-term investments such as rentals and installment sale financing.   These are exposed to the magic of compounding (over time) via debt reduction, tax deferral, and rent and/or valuation appreciation.

Mix and Blend.  Grow, take some profit off the table, and reinvest.   Try to build a business operation to create your living cash flow (and take advantage of tax deferral opportunities) and as you create saving's invest in retirement packages (as I refer to) with rentals.

Good luck.  Work hard.  Focus on what you excel at and just do it.

Mark Updegraff · Answer

The money is in the best location at the cheapest price possible

Peter Giardini · Answer

J.... how eloquently put!

Where is the money in real estate?

Most Popular Reply