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How Do Real Estate Investors Make Money?
Readers Question:
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This may sound stupid, but how do real estate investors make there money? And what is a good amount of start-up capitol to begin with? Can you start with only 20 grand?
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Do you have a real estate related question that you need answered? No problem, if you would like to ask the webs best real estate license community a question, visit our real estate questions page and fill out the form to the right.
December 7th, 2009 at 5:56 am
There are a couple of ways that people do this.
They could buy a house (usually by taking out a mortgage) and then rent the house to people. If the rent they charge is higher than their mortgage payments, then they use the rent to make the mortgage payments and have some extra leftover. The downside to this is that taking care of the house is their responsibility. Anytime that something breaks, the tenant will call them and they have to come fix it. It’s also possible that the tenants won’t pay the rent, they’ll still be stuck with the mortgage payments.
Another way real estate investors make money is by buying homes and then “flipping” them. This is when someone buys a house at one price, and then tries to sell it again at a higher price. Sometimes they even spend some money fixing the house up so they can get a better price for it. It can be risky, because they might not be able to find someone to buy the house from them.
December 7th, 2009 at 8:49 am
The same way you make money investing in anything…
Buy low, sell high.
20G might be enough, but this is a VERY bad time to invest in real estate. Wait until the mortgage crisis is over, perhaps the middle of next year.
You probably should also check out the special form of mutual fund called a Real Estate Investment Trust, or REIT.
December 7th, 2009 at 1:31 pm
Generally they invest in projects which are just starting, when the prices are low.
The prices start rising once the project nears completion and they book their profits by selling.
You question on amount for investment- thats up to you. Your plan should be laid out clearly, with entry and exit points and estimating your maximum losses and minimum profits.