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How do Real Estate Investors make there money?

is it investing in the house and making it look better? how do real estate agents make there money. i know some are extremely successful and i don't understand how they are so wealthy.

Public Comments

1. Mostly flipping. Short sales. 1031 There are tons of ways to make money, but if you have not started this is not a good time to jump in unless you have a lot of money to get started with. This is a great time to grab inventory and rent it out until the market turns again.
2. You may want to join our investment group at http://www.myspace.com/dreamloanusa Real Estate investors make money in many different ways... Purchasing homes that are 20-30% below their value through foreclosure sales, or distress sales, or someone who just needs to sell in a hurry at a discount. They then turn around and sell it for market value. Another is picking up a home that they want to rent out. This work with multiple properties. Rich Dad (robert kiyosaki) is very rich from this. Lets say you buy a house that is worth 100,000 for 90,000. The mortgage payment is 600.00 per month, the Insurance and Taxes are another 125 per month. The house is costing you 725.00 per month. But you can rent out this house for 900 per month. You are pocketing 175.00 per month of income as long as you have it rented. Investors pick up 5-10 houses like this a year. After a few years you can see how the money each month comming in really builds up. Now lets say in 5 years, that house you bought for 90K is now worth 175K, and the amount owed because the mortgage has been paid down is 85K if you choose to sell that property, you now made the extra cash each month off the rent, plus now 90K in profit from the sell of the house. If you owned 5 New homes a year, and they all appreciated like that in value, now you just made 2.25 Million Now there is a lot to learn to do that. But thats the basics. Real Estate agents make money basically from Helping someone buy a house, or sell a house. Lets say a house is selling for 200,000 The Agent who is selling it usually will get 3% of the sales price from the seller when it is sold. That would be 6000 in commission. The buyers agent would also get 3%. Granted it depends on how the contract is set up, but thats the basics again. There is no set standard on what commissions are being paid. its between the listing agent and the seller of the home.
3. First off they have there sources to undercut the market, they can get a hold of property's before you can. This also creates a shortage and decrees home inventory, yet it count as a sale. Remember not long ago there were record sales yet no inventory, excuse me how can you sell some thing that you do not have. Easy some one was undercutting the market, this was also done with Realtors and there so called MLS. Check out this web site and see how they did this. http://www.breakingbubble.com/index.htm To stop this dishonest business practices. One day and soon i hope there will be a mandatory, county ran MLS that is publicly assessable, only then will there be a fare and honest housing market. Till then good luck, on even being able to find most of what is for sale.
4. Real estate agents make money by helping other people sell or buy properties. They receive a commission (usually 3% of the property value) for each purchase or sale that they are involved in. In major markets such as California, Florida, and many metropolitan areas, properties can easily exceed $500,000 so a real estate agent who helps someone buy or sell this property will make $30,000 right there (some of this may go to the agent's company if he works for Century 21, Prudential, Coldwell Banker, etc.) For real estate investors, there are many different profit strategies that can be used to make money: **A "Cash Flow" or "Rental property" deal involves purchasing a house and then renting it out to tenants. This is most effective with multi-family properties, although any residential property can be used to generate rental income. **A "Flip/Rehab Deal" (a.k.a. "Flip" or "Rehab") involves finding a property in poor condition (somewhere between 3 and 10 percent of the property value required for repairs), buying the property upfront, hiring people to make the necessary repairs, and then reselling the property for a much higher price than you bought it for. This normally takes 3-6 months (plan for six, so that you don't lose out if repairs or sale take longer than expected), and can be done with "no money down" if you have the right property and are able to borrow money from hard money lenders based on the *repaired* value of the property. ** "Flip" (a.k.a. "Short sale" or "quick flip") - This is where you basically buy a property that is a good 25-70% less than fair market value, and then just resell the property. Aside from very unusual circumstances, the best way to do this is to find properties that are being sold through: probate sales, estate sales, or foreclosure auctions (at the county level, or through HUD or VA or other government agencies). Other possible sellers are banks who may be highly motivated because they don't want any non-performing assets on their books), VERY highly motivated sellers, and people who are in default but haven't yet been foreclosed upon. With the last two, it is crucial to ensure that you aren't taking advantage of these sellers because of their "weak" position. **"Terms Deals" involve buying from a homeowner using an unconventional financing arrangement involving a long-term purchase plan, and then selling to a new buyer (usually someone who can't qualify for a conventional loan) and making money on the spread between the down payments, monthly payments, and final lump-sum payment of the incoming and outgoing contracts. ** "Hold for Appreciation" deals. These involve purchasing a property, and then holding it until its value increases enough for the investor to sell it and make a profit. This strategy is very risky and low-probability if used by itself. However, if other deal types, such as flip/rehab deals or cash flow deals, are already set up, appreciation in the marketplace can increase that investor's profit beyond the planned-for profit. **Assignment - This involves structuring one of the other deal types, and writing a contract that gives the buyer the right to assign the contract to another individual. The assignment investor then sells the rights to the contract to an investor or owner-occupant for a few thousand dollars' assignment fee. You can assign a flip/rehab to another real estate investor, or a terms contract to an owner-occupant (instead of structuring two different contracts). This profit strategy allows the investor to quickly generate income without needing to stay involved in a deal. Most purchase contracts from government agencies (i.e. contracts for most foreclosure sales) are standardized and may not be modified, preventing an investor from assigning the contract. There are obviously nuances and subtle variations for all of these profit strategies, but those are the basic ones.