4 Ways Real Estate Investors Make Money With Rental Properties

Once you realize that real estate investing is not risky, you ‘ll see all the ways that you can make money from owning properties and letting someone else pay for them. Many novice investors just think about rental income but true investors learn early that their rental properties go far and beyond monthly rent checks.

How a Property Owner Can Use Lease Options for Huge Profits

A lease option for the seller will involve finding a tenant that is interested in purchasing the property in a few years. Normally, the tenant will have bad credit and cannot get a normal financing to buy, so they have to rent while they build up their credit. This tenant will find a lease option works great becuase they can rent, not get locked in to buy, and can improve their credit over the next few years.

How to control investment property with a lease option

Real estate Lease options can be used by both buyers and sellers to maximize profits. In this post I’m going to talk about how a real estate investor can use a lease option to control a property for future appreciation and possibly cash low.

A lease option consists of 2 contracts, a lease and an option to buy. The lease gives the buyer the right to possess the property. The buyer also has rights to sublease the property, unless specifically noted in the lease contract that subleasing is not allowed. The option is a binding contract that states the seller must sell, but the buy has the option to buy. Unlike a bilateral purchase contract in which the seller must sell and the buyer must buy.

What is Gross Rent Multiplier and How to Make Huge Profits Using It

Let’s say you are looking at a 4 unit rental property priced at $200,000, with monthly rental income of $2,000 ($500 each unit). Using the GRM, you would first calculate the yearly rental income which will be $24,000 ($2,000 X 12). Then you will find out the area GRM. You can find this by contacting a real estate agent that specializes in investment properties. The real estate agent tells you that the GRM for the area is 8. So, you multiply $24,000 X 8 and get $192,000. As you can see $200,000 is a little over the GRM price, but there are many other factors that go into the property price besides the GRM. Use the GRM to only get the ballpark prices.

Real Estate Investing Criteria - Finding Your Perfect Investment

How do you know what to buy if you have no idea what you are looking for. Most new real estate investors never set a criteria and therefore, never buy investments. It makes no sense, since we all set criteria on just about everything else buy. When we want a new TV, we set our criteria… must be 42”, HDTV, plasma. We then go to the electronics store and look for that TV and if is there, we buy it. We do the same with small purchases, large purchases and just about everything in-between.

We even set criteria on our friends and loved-ones.

I’m going to marry a man that’s 6 feet tall, tan, blue eyes, loves to cook and clean the house, loves to watch desperate housewives, and never complains… You get the point

How come this is so hard for a rookie investor to understand?

8 Real Estate Investing Myths and Real Truth Behind Them

I tell this story because it is falls under myth #8 below… You can do it, but it will require you to want to be financially wealthy.

I remember a few years ago, I had just sold a house and made enough to buy another one, but I wanted to go big. I wanted to buy a 10 unit income property. I had no experience with this type of property. I met the selling agent, and right from the beginning he gave me attitude. In fact the more I asked the more he became a jerk, until all of a sudden he said “What you are? A f****** rookie.” I was shocked, not at the f bomb, but at the fact that I was there with money ready and willing to buy, and he treated me like I was just there to waste his time. Maybe I did ask too many questions, but maybe if he had shown a little more caring and respect, he would be my agent, and “go to man” for apartment building in Oakland.

Business planning for real estate investors

Yes, you will need a business plan if you want to be a succesful real estate investor, even if you don’t plan to do it full time. With a plan you not only stay on track, but you can always go back and see what is working and what isn’t. Changing your plan accordingly will help you stay on top of the market, since markets are always changing.

business-planPlanning to run a business can seem very daunting, but we are going to keep this super simple, to the point and most importantly doable.

Invest in real estate or invest in 401k, what has a better return?

The standard retirement plan is the 401K. Almost every big employer will offer their employees an opportunity to build their retirement savings with tax free contributions. Many companies will match their employees contributions. The majority of companies will match 50% up to 6% of pay.

How can we compare a 401K to real estate investing? It’s seems like apples to oranges.

To start, both can be used to build a large retirement nestegg. Both require annual monetary updates, and both can be destroyed by market volatility. My husbands 401K’s are worth about half, as of late because the large drop in the stock market.