Hey, my friends. Kris Krohn here and today we're talking about the five ways of
making money in real estate and number fifth is by far my favorite so hang
tight and I'll share it with you.
So in this video, I want to share with you five
different ways of making money in real estate. There are many ways of making
money but today, I'm going to share five very specific ones. Number one,
appreciation. I mean, the good news about real estate is if you look at what has
happened with values over time, they tend to what? They go up in value. You know,
there are some people that don't know what to invest in and what they do is
they take their cash and they hoard it and they put it in the bank or they put
it under their mattress. Cash is one of the worst and most hated
investments of all time. Why? Because our dollar is not a good store value, it has
a history of going down more than three percent every year which means that for
every hundred thousand dollars you have in the bank, you're losing over three
thousand dollars a year just by keeping it in cash which means that anything you
put your money in needs to be able to grow in value. Instead of losing value it
needs to what? It needs to increase in value so real estate ends up being this
amazing hedge because guess what, it's outpacing inflation, it actually
goes up historically more. Now how much more? It varies from area to area, some
areas are just three four five percent here, some areas historically are six
seven and eight percent a year, you'll have your burst scenarios that will grow
by 20% but often the areas that shoot up really high also what? They
shoot down so we're talking about the average over time, we're not talking
about the highs and low. By the way, even though this is the first way you can
actually make money in real estate something that you should be really
aware of is the fact that if all you're doing is buying a home because it goes
up in value, you can really get yourself hurt if you need to sell your home in
the short run because if you're buying that market inside of a bubble and then
all of a sudden it goes down, it might take years before it actually bounces
back so yes, it appreciates on average with time but you need to be careful on
your timing if you're just buying it based on appreciation. I don't recommend
that. Okay, number two. Real estate is actually an investment that produces a
cash flow. This is weird because when you put your money in a 401k or IRA's
or equities or the stock market, guess what, you don't get a cash flow,
you're buying an asset that you hope what? Goes up in value with time. Real
estate's a little bit different, most real estate projects like a rental, they
actually spin off a cash flow so actually after you've covered your
liability like the debt or the mortgage, there can be money left over. I mean, a
good example of that would be you know, buying a single-family home and I've got
a thousand dollar obligation to the bank every month but I'm renting it out for
$1,500. Maybe there's a couple hundred dollars of expenses so there's three
hundred dollars positive cash flow every month on that property so cash flow is a
really great reason where I like to invest in real estate. Okay, reason number
three to be in real estate is that you can make money through commissions or
management fees. You know, the reality is if you are going to play in the game of
real estate, you could hold a realtor's license, a loan officer's license, a title's
license, a property management foot you know, you can be earning a property
management fee, all of these things. Now you can't actually make money on all of
them at once or at least the ones that are regulated but you can on at least
one of them which means that when you buy real estate there's room for a
double dip and double dipping is kind of cool in real estate because you know,
like on several of my deals, I was a loan officer and so I would write the
mortgage with the bank and then I would actually be able to charge and make four
five six seven thousand dollars on a basic single-family home for just
writing the mortgage of it for some people that's a profit selling so that's
a third way of making money on your real estate investing. The fourth way that you
can make money on your real estate, it's not really my favorite but I think it's
worth mentioning because you might have a project that can cash and bing on it
which is through ancillary income like for example, you might have apartment
complex and you have vending machines or you might have a laundromat that's right
next to it so sometimes your real estate comes with these side benefits as
something that you can tack on to the project and you can pick up some extra
money that way but fifth and by far my hands-down favorite is what I call
equity which is the money that you buy on the property as you get at a discount.
If I have a real estate deal that I'm doing that's worth a hundred thousand
dollars and I get it for eighty thousand dollars then I'm buying it
20% below market which also just in this case happens to be $20,000
market and that $20,000 is what? Well,
that's equity because remember, I'm buying it for 80, it has a value at a
hundred thousand. That extra $20,000, that's just a benefit that I get
for owning the project. If I had a goal of paying off the property, guess what,
it's already one-fifth paid off, it's already 20% paid off just
because I bought it smart. I'm clearly biased on the things that I like most
about real estate. If you want a turnkey system for how you can really make the
most money with the least time, least effort, least risk then head on over to
my website, it's also in the link in the description below and me my team will
share with you how we can work together on helping you crush it in real estate.