Real Estate Investment

How to Make Money in Real Estate — Whether You’re in an Up OR Down Market

Watch five minutes of any reality show focused on house flipping and you would think that it is as easy as pie to pick up a house at a low price, do a few weeks of improvements and then flip it for enormous sums. That, however, has never been at all realistic. Sure, it has happened, but no novices or part-time real estate investors can enjoy such opportunities. In fact, speak with active flippers in such lucrative places as North Dallas, Plano, and the Southlake areas and you would hear that even they might struggle taking profits on flipping activities.

What this does NOT mean is that you can no longer profit from real estate ventures. What it DOES tell us is that you have to know how to make money in ANY real estate market – up or down. It just takes a few good tips and tactics to enjoy success at all times and in all markets.

#1 Know the Market

One of the worst blunders that novice flippers make is to purchase a property just outside a growing or “up and coming” market. A property is either within the market with the most growth and potential, or it is not. Even a matter of a single block can end up costing thousands in a lower sale price or less interest. So, the most important way to make money in real estate is to know the market, and you can only do this by committing to the research.

#2 Do the Research

If you want to get properties that are in the more lucrative markets, you’ve got to do the research. Know where they are, make connections with the potential brokers or listing agents, and even figure out if you can get an inside track before they are listed. This is an ongoing process and you’ll have to be committed to knowing your market and remaining on top of properties that may soon be listed.

#3 Rentals

Of course, you need to be making money in real estate to continually invest in further assets and properties. The one way you can be almost certain of doing this is to use your initial research and knowledge of your markets to get into at least one rental property. A multi-family property is often superior as it enables you to remain safe from 100% vacancies, and it is going to supply steady income at all times – even in the down the market. Current statistics point towards Plano and Dallas as the hottest markets in the U.S. for 2017, and that is great news if you are looking to invest in rentals. However, even if you purchase in a down market, your rentals are going to be a source of reliable revenue, enabling you to make money in real estate at any point in time.

#4 Take Advantage of Current Conditions

Your research and connections along with rental income are great ways to make good returns on real estate investments, however, you also want to consider the current market. At this point, there are still many short sales and foreclosures available. If you have cash for investment, these can be unique opportunities to make quick profits or find great long-term investments in multi-family or commercial properties. Rarely will investors purchase for cash, but with short sales in abundance, you won’t want to miss out.

#5 Consider All Types

Another unique tip for making money in a down market is to consider buying outside of your asset type. Yes, we encourage solid investment planning and always say that wise investors know their ideal investment types. However, when properties are in abundance and when financing is changing rapidly, it could be wise to look at commercial properties over residential units. This is going to depend tremendously on your capabilities and available capital, but commercial real estate is one great way to diversify your portfolio and guarantee income regardless of overall market conditions.

There are many ways to create reliable income and earn on real estate in a down market, and hopefully these tips can steer you towards profitability in your investments.