|The 3 Easiest Ways to Make Money In Real Estate
I once asked my handyman what was the easiest money he had ever made in his life. His
answer was that although he had been in many small businesses and had done countless
handyman/contracting jobs over the years, the easiest money he made was in roofing. He explained
how that roofing work is higher risk work that many folks dislike and fear doing, therefore the mark-up
He especially likes smaller flat or semi-pitched roofs. For about $250 in materiallys
he could charge $1000 for a roof which he could install in a day. Larger shingled roofs have even
better mark-ups, although more time consuming.
I then began asking myself the same question--What was the easiest money I had ever made
in business or investing?
There are 3 ways or modes (versus tools and techniques) that came to my mind quickly.
- By far the easiest money I have ever made was from real estate appreciation. I have been
fortunate to have been in the game long enough to ride two giant waves of appreciation and
inflation--The price runup that occurred in the mid to late '80s, and the current bubble we have
going now. Any dummy can make money in real estate during strong seller's markets. It makes you
feel smart, but the main smart thing you really did to achieve it was to be smart enough to buy it.
- Next, buying discounted property through patient tracking and buying of properties is the
next easiest money I have made. Like when I bought a $20,000 house for $2800. Nuts, but true. Or,
like the $20,000 purchase with 100% owner financing which was resold via lease-option for $39,000.
Thoughtful and determined deal making is the 2nd easiest way to make money in real estate. The
cliche is true--You make your money when you buy. One caveat: Lower-income grade deals must be
outrageously benefically priced to be worth the risk. Solid, middle-grade properties need not be
"steals" to be good buys. A few years ago, I bought 2 houses from my attorney at decent
to fair prices, but they were in excellent areas and have ALL brick exteriors with new roofs. They
weren't steals, but they have appreciated by $20,000 each since acquisition.
- Lastly. Rents. This takes time as I mention over and over, but once properties become
seasoned and rents rise and debt drop off--rents are easy money. The problem-- few have the future
sight to maintain their hand in the game. It is a wonderful business to learn. Most landlords
don't work very hard.
- Rehabs and Interest Profits--Yes these could be debated as easier than rents, but without
rents you can't get number 1--Appreciation and Price inflation from governmental debt driven
inflation. And, you pay a lot more taxes, therefore limited your networth growth.
Copyright 2003 Infoleverage
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