How do you make money in real estate?

Real Estate Broker/Owner with Victoria's Luxury Estates - real estate office Palm Beach, Florida

How do you make money in real estate? The most basic way is to buy low and sell high.

The whole point in investing is to make a profit by finding properties that are undervalued. How does one find out what is undervalued versus overvalued? If you didn’t do the research yourself, a real estate agent will know the area and what the market is doing where you are buying the property. Real estate agents are negotiation specialists that watch the real estate market every day. Real estate is essentially one of the highest ticket items in the shopping center of life. Don’t go at it alone.

It’s advisable to stick with one market, perhaps the one closest to you in proximity to start. So from the first step, you have identified general trends in the value of homes, and you have a real estate agent that is pretty good at spotting undervalued homes. Assuming you acquire a home, you want to profit from it by finding a real estate agent that will list it for sale at a higher price. Most markets appreciate in value over time so if you want a longer term approach that will definitely work. Holding on to a property for a while and listing it for sale later at a higher price when the market is up should be profitable. If you are short on time and/or looking for a quick profit, making upgrades will automatically raise the price of the home as well. When using this approach think in terms of what the market and buyers want, NOT what you personally want. Also, you need to be disciplined and know your budget from the onset, or you may be finding you are learning that you need to make certain renovations or upgrades, and didn’t anticipate it going over a certain cost. Do the numbers. Factor in all costs of supplies, repairs, upgrades, labor and add extra for just in case. Know the number you want as profit out of the sale.

Real estate is serious business, and thus diligent financial planning and budgeting is critical to your success. Don’t worry you don’t need to be a finance pro, however think ahead as to what is needed before actually going forth with investing in real estate.


Comments (5)

David Barr
Berkshire Hathaway HomeServices Florida Realty - Sarasota, FL

While the notion of finding "undervalued" property is a nice line from a text book, the reality is that those "undervalued" properties often have multiple buyers bidding up the sale price.

Investing is more realistically finding a property that can be improved for little money in a short period, and selling at a higher price.

Jun 25, 2015 10:16 PM
Rose Mary Justice
Synergy Realty Pros - Dandridge, TN
Synergy Realty Pros

There is money to be made in real estate. The key is to plan. Start on ones that lack little to be done then work your way up.  A small profit at first will "get your feet wet" for your next challenge. Experience in flipping takes time. Plan for things unforseen.

Jun 25, 2015 10:21 PM
Randy Hilman REALTOR® Associate Broker
Randy Hilman Homes in partnership with Bean Group - Moultonborough, NH
Guide & Mentor to Home Buyers & Sellers

Thanks, Victoria, for sharing your insights into real estate investing. In my view, the best approach to short-term real estate investing is to buy below market and re-sell wholesale.  There are plenty of flippers and rental investors who will pay $5,000 - $10,000 more than you paid, if you know how to reach them.  Risking capital and tying up a lot of time in the effort to maximize profit in the short term is a sure-fire formula for failure.  A long-term strategy in real estate is best for building wealth.

Jun 25, 2015 10:54 PM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

for most buyers/sellers real estate isn't a business. My personal real estate is about having a home I love, not about building equity.

Jun 25, 2015 11:06 PM
Victoria Piroso (561) 705-7355
Victoria's Luxury Estates - real estate office - Palm Beach, FL
Victoria's Luxury Estates - office

Some great comments so far!

Tammy - you're right and most people move every 5-7yrs. Buying a home that appreciates in that time would be a great investment when you're wanting to sell!


Jun 25, 2015 11:54 PM