Is it possible to make money fast with real estate investments?

The answer to this question is – it depends. It depends on what you mean by “fast”. When you are considering an investment in real estate you are increasing your diversification, giving your portfolio another asset class and if done right can limit your risk.

All this is good but there are really only 3 primary ways that you can potentially earn money with an investment in real estate:

1. Have the value of the property increase. Let flip the property for a profit.
2. Earn profits from a business that depends upon the property. Let you operate a parking garage at a shopping mall.
3. Collect rent by leasing out the property to tenants.

There are some other specialty niche ways of earning income from real estate, like tax lien certificates, but these 3 main ways cover the vast majority of passive income - and fortunes - that come from investing in real estate.

Let’s take a closer look at each of these three ways.

The Flip

Turn on just about any program that airs on HGTV and you will think that in half an hour to an hour you will be able to take any property, renovate it and sell it for huge profits. Easy, right? Not so.

It takes quite a bit of experience and the right market to make money in a flip situation. All of the following need to happen to achieve a positive outcome.

• The real estate agent needs to identify the worst house in the best neighborhood. The house that needs the minimum of upgrading for the maximum of resale value. Normally this means upgrading the kitchen and bathrooms, or perhaps finishing a basement, but there are many repairs that may be required that don’t add to the resale value of the house.
• The real estate agent needs to know the local market very well to identify those areas that are on the upswing.
• The contractor needs to be high quality and work for the right price.
• The designer needs to know what will sell and what won’t. They need to keep up with trends and know their market very well.
• The money lender needs to have the best interest rates and a flexible timeline, especially if the property doesn’t sell right away.
• Property taxes need to be considered. Many regions tax homes at a different rate if you do not live in the home. It is taxed more like a business than a primary residence.
• The property stager must have an eye for good layout and attractiveness.

For these reasons most of those shows on HGTV star a real estate agent, a contractor and a designer. The show is getting their work for free AND they are earning money by selling advertising during the filming as well. Plus, they only air the successful flips, not the ones that fall flat.

All that being said if you can ride the wave of a rising property market then with some appropriate renovations it is possible to earn a profit relatively quickly (3-6 months) with a real estate flip.

Business that depends up the property

The example here is that you own the car-park that operates beside a shopping mall or office tower. Without the mall or office building your car-park won’t have any customers – so you depend, and make money, on the real estate.

Can you make money fast? That depends on the nature of your business, how much you need to earn and what you consider to be “fast”. There are too many variables – only you can answer that question.

Collect rent

This is a simple idea but is not always ‘easy’. If you have a property that is in a great location and is appealing to others, you can charge those other people to use your property. Companies like Airbnb are trying to make it easier but there are still complications.

• You need to find tenants,
• Pay for advertising,
• Collect rent money,
• Update the property,
• Perform regular maintenance,
• Perform emergency maintenance,
• Pay property taxes.

Now if you own a luxury hotel in an up and coming tourist destination and can pay for professional experienced management of that property then you will be able to earn a passive income that will be very handsome and should last for years to come.

Conclusion.

The question of ‘fast’ is dependent upon your definition. Flipping houses can be done profitably and quickly but only in very hot market. Depending on what business you run your real estate investment can be profitable. Rental income with professional management might be the easiest way to earn ‘fast money’.