How to Make Money in Real Estate - The Numbers in the Secret Formula

Want to know how to make money in real estate? This formula from the pros might surprise you.

Sure, there are plenty of angles for how to make money in real estate, but how many methods really deliver? Almost all money making real estate strategies revolve around the not-so-secret formula of buying low and selling high, but many work better in theory than in real-life practice. The fact is, there are only a few methods that consistently make money for the real estate investor project after project, deal after deal.

So how do you determine which strategies really work and which ones flop? Well, let’s see. You could go out and spend years chasing after every type of real estate deal in the world. To save you some time, here are a couple of ways the “experts” suggest you can make money in real estate:

Foreign Real Estate Investing: Proponents of this strategy suggest buying real estate in up and coming countries around the world where property values are rising. The whole idea of buying real estate in a foreign country in order to make money seems like

a very convoluted strategy, especially when you consider there’s a better way right in your own area.

Buying Resort Properties: In this strategy you’re encouraged to buy property in areas of the country poised to take off as the next hot resort area. Here again, you’re getting involved in speculating not only on the property itself, but also gambling on the area in general. This is another great example of too many ways for things to go wrong.

But let’s get serious. What strategy works anywhere in the country, deal after deal?

Flipping Properties

Flipping properties is a strategy that has proven consistently successful for the down-in-the-trenches real estate professionals who are actually making money in real estate, year in and year out. In fact, successful flippers have a very specific formula they follow for every flip. It’s been time tested and, if followed diligently, will work for anyone.

Winning Formula

Here’s an example of a typical house flip and how the formula works:

Purchase price of house (example)………………………………… $50,000 List price - value after repairing home……………………………… $144,900 Sell Price (90% of list price) estimated actual sell price…………. $130,000 Net proceeds - 90% of sell price (after closing costs, etc)……… $117,000 Less profit target (clear profit you hope to make on deal)………. -$40,000 Less estimated cost of repairs……………………………………... -$28,000 Remaining balance = ………………………………………………. $49,000 Maximum offer price (remaining balance after profit, etc)………. $49,000 Initial offer price (75% of maximum offer price)…………………... $36,750

This formula provides step-by-step instructions on how to calculate your costs, profit target, offer price, etc.

Naturally, there are other issues involved. For example, you need to know how to place a value on the home in order to establish a purchase price, and you need to estimate the cost of repairs. But you can always get help on these from trusted real estate associates like your realtor and your contractor, with whom you should establish long term relationships, if you haven’t already.

By following this simple formula, and with a little help from trusted allies, you, too, can make money in real estate.

About the Author

Josh Cantwell is the top residential real estate investor in his community, has been a full-time investor since 2003. Josh has bought and sold over 600+ properties since 2003. Josh’s team at Strategic Real Estate Coach (SREC) has 7 full-time, high-end coaches. Each coach is an investor first and foremost and a coach second. SREC has coaching students all over the U.S. who are implementing SREC real estate investing strategies and building successful businesses. One of the best ways to learn how to make money in real estate is to watch over an experienced, successful investor's shoulder. Want to see how all these numbers play out in a recent deal? Check out this video: https://www.youtube.com/watch?v=yfCtqnEIsm4