Rehabbing and Renting Are NOT Good Ways to Make Money in Real Estate
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House rehabbing and becoming a landlord might be one way to make money over time, IF you’re willing to work hard to get there. However, if you’re looking to make LOTS of money now, these two are the WORST ways to do it in the real estate world.
Rental properties are thought, by many people, to be a good way to profit. After all, you’ll get paid for just owning a home or property. However, you usually won’t make big profits until later on down the line or unless you buy a lot of properties at once. Then, you’ll have to deal with repairs, tenants, and other issues that are sure to make it more of a nightmare than you ever expected.
You will probably spend more on mortgage payments, taxes, utilities, and repairs than you make. That leaves you with no profits and properties that you don’t really want to own. If you think rentals and landlording are going to be a good way for you to make money, just interview a couple of landlords and you’ll change your tune! Most of them are slaves to their tenants!
House rehabbing is a money pit for most, as well. You’ll buy a home, and maybe you’ll get it cheap. However, you’ll still have to make mortgage payments while work is being done, and more payments after that until it sells. Plus, you’ll have to invest thousands of dollars into the remodeling, tying up even more of your hard earned cash. If you don’t have the money to spend in the first place, you’ll likely be shelling out more than you profit. In the end, on your first deals, you’ll be very lucky if you walk away with any profit at all. Make more than $5,000 to $10,000, and you can consider yourself a success. But why settle for $10,000 for three months of back-breaking work when there’s something better?
Foreclosed homes are a much easier investment. There’s no work to be done and your money isn’t tied up for long periods of time. In some cases, your cash isn’t involved at all. You simply learn how to buy foreclosures, buy them cheap, and then re-sell them to the appropriate party (investor or owner occupant, depnding on the deal) once you’ve found them. You will make bigger cash profits up front and walk away much quicker than you would in any other real estate investment. It might seem like fun to be a landlord or fix up houses, but if you’re in it for the money, It’s not the best choice.
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