There are many ways to make money in real estate, but to do that, as the Nike slogan goes, “Just Do It”. Many are afraid to take the risk but when you think about it the risk of investing in real estate is very low compared to other investments because unlike other investments real estate is a tangible asset that you can see and feel. I would always say the worst-case scenario is if I can’t sell it, I can always lease it out until market conditions change. So how did I do it?
First Project - Get my feet wet (Buy and Hold)
Being a beginner in real estate I needed to start slow and learn the language. When I finished college I stayed at home and saved money for a down payment. I then took out a loan and using a real estate agent I bought two rental properties at an average purchase price of $35,000 each. I leased out the property and saved the profit for the next project.
Second Project – Fix & Flip
A few years later I bought my first fix and flip. With limited funds and no experience, I started by buying a foreclosed condominium at around $35,000. I chose the condominium because it required minimum work and it allowed me to gain experience working with contractors and I could do some of the work myself. I bought and sold numerous properties for a few years and saved some of the profit.
Third Project:
With the profit I made off buying, fixing up, and selling real estate I bought a (with the help of a real estate agent) 19,000 square foot lot in an up and coming area for $57,000. I had the lot subdivided into 7 lots. After subdividing the lot the cost came out to be $8,142 per lot.
Fourth Project:
With the experience and confidence, I gained from the first two projects it was time for me to jump into new construction. With limited funds and no experience in building new construction I knew it would be difficult to borrow $1,500,000 from a bank to build 7 townhomes. I also wanted to minimize my risk so I built two at a time. The cost to build each townhome was around $225,000 and the townhomes were selling for around $375,000. At this time I decided to obtain my mortgage brokers license so I could provide financing to the buyers of my townhomes. Now you know how I got into the mortgage business.
Fifth Project:
I used the profit from the new construction project to buy small lots (using a real estate agent) in upcoming areas. Two months ago I sold for $210,000 a lot that I purchased for $67,000 a little over two years ago.
A good way to start investing in real estate is to work with a real estate agent with experience finding and analyzing investment deals. For a recommendation, please email yosselin@tmortgage.net.
Sheldan Perry is a highly skilled mortgage professional with more than 20 years’ experience in all aspects of real estate and finance. He specializes in consumer and investor financing. He can be reached at 713-524-4242. www.tmortgage.net