Real Estate Blog & Podcast

The Best Ways to Make Money with Real Estate in 2024 (With Number Breakdowns!)

real estate 101 real estate coaching real estate investing May 10, 2024

 

A lot of people understand that making money in real estate is possible, but not many people understand the numbers and strategies behind it. If more people did, there’d be a lot more competition!

 

JVs (Joint Venture) 

 

A great way to get started making money in real estate is through partnering with other investors through joint ventures. Joint ventures allow you to pool resources and invest in larger, more lucrative deals. 

 

Say you and a partner each pitch in $100,000 to buy a $650,000 multi-unit building in an appreciating neighborhood. After you make all of the necessary renovations, you can rent out the units and split the net income. Then years later, you can sell the property for $1 million, splitting the $350,000 profit!

 

Flipping Houses

 

Another way to make money with real estate is through flipping houses. You start by buying a distressed property, renovating and improving it, and then reselling it for a profit. 

 

For example: You could buy a crappy house in a nice neighborhood for $350,000, invest $75,000 in the rehab, and then sell it for $500,000, netting you $75,000 in profit. (Minus any other expenses).

 

Owning Rental Properties

 

The best way to build long-term is through owning rental properties. Rental properties can generate you a nice stream of passive income that you’ll be able to live off of the rest of your life. (As long as you keep finding tenants. ) 

 

For example: Say you find a solid $400,000 single-family and put down 20% ($80,000). With a 30-year mortgage at 8% interest, say your monthly payment is around $2,320. Now, you rent out the property for $2,900 per month, leaving you with $580 after covering the mortgage. 

 

You've also got expenses like property taxes ($300/month), insurance ($100/month), and maintenance ($200/month), so in this example deal, you’d only be walking away with a positive cash flow of about $100 a month.

 

$100/mo isn’t much on the cash flow side of things, some properties might generate $500/mo in cashflow, in all depends on the deal. But in this particular deal, if it were in a nice area and fast-forward 20 years, the appreciation on that property is going to be insane! 

 

20 years ago, the average house was around $200,000, and now it's doubled to $400,000. Imagine what it'll be in another 20 years! And throughout that entire period, you'll be enjoying positive cash flow, occasional rent increases, and you’ll be building your wealth passively while you're out there crushing more deals.

 

House Hacking

 

Another great way to make money with REI and get your living expenses paid is through house hacking. Say you find a solid duplex for $449,000, and you put down 20% ($89,800), and your monthly mortgage payment comes out to around $2,600. 

 

What you do is you live in one unit and rent out the other for $2,800 per month. The rental income would not only cover the entire mortgage payment but also put an extra $200 in your pocket each month. And as you build equity and the property appreciates over time, your net worth grows without you having to lift a finger. 

 

Fix and Holds

 

Another approach you can take in the world of real estate investing is fix and holds. With this strategy, you buy a distressed property, rehab it to up its value and appeal, and then hold onto it as a rental for long-term cash flow and appreciation.

 

With this for example, you could buy a property for $248,000 and put 44 grand into the rehab. Lets say after the rehab, the estimated value of the property was $320,000. 

 

You then got a tenant paying you $2,500 per month in rent, and your mortgage costs totaled $2,080/mo. With the rental income of $2,500 per month, subtracting the total expenses from your rent would give you a cash flow of $420/mo!

 

As the years go by, rents in the area would keep going up, while your mortgage payment stays the same. In 10 years, you could potentially be charging $3,500 per month in rent, and you'd be building equity and benefiting from the property's appreciation! 

 

Subject To Deals

 

Subject To’s allow you to acquire properties by taking over the existing payments from the current homeowner instead of getting a new loan. 

 

For example, if a homeowner owes $200,000 on their $400,000 house, you could make a deal with them to take over their $200,000 payment obligation for little or no upfront cash!

 

You could then rent out the property to get cash flow, or make renovations, refinance, and cash-out!

 

Wholesaling

 

You can also make money wholesaling by getting distressed properties under contract and then assigning those contracts to other investors for a fee before closing. 

 

For example, you could contract to buy a distressed $300,000 property for $225,000, then market that contract to other investors and assign it to an interested buyer for, say, $235,000. Subtracting the difference you would take home $10,000 as your wholesale fee. 

 

This allows you to make money without needing to actually buy and renovate the property yourself. All you need to be able to do is prospect and/or market yourself!

 

Slow Flips

 

Another cool way to make money with real estate is slow flipping. With slow flips, you’ll buy a cheaper, older property and gradually improve it over a longer period before selling. 

 

So for example, say you bought a home for $325,000 at a foreclosure auction. Over the next 2-3 years, you would renovate the property in phases as your budget allows. Then once you’ve finished updating it, you could potentially list the property for say $525,000 and make a $200,000 gain!

 

Get Started!

 

There’s a lot of strategies out there for making money in real estate investing these are just a few of the best ones in my opinion. There is a path for everyone to make money in this business. The key is to start taking action, do your research, understand the numbers behind each strategy, and don't be afraid to get creative. 

 

With patience, perseverance, and a willingness to learn, real estate can be an incredibly lucrative wealth-building vehicle for you! The most important thing is to get started and not let analysis paralysis hold you back from reaching your full potential!

 

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