Four Profit Centers Of The Current Property Market

As you move closer to your goals as a real estate investor, there are certain things you must keep in mind;

1. How you look at every deal?

2. What is the exit strategy with which you need to be familiar?

This is the beginning of what we call The Four Profit Centers. Here are four profit centers of the current property market and how you can utilize them for profit:

1. Wholesaling

Wholesaling is by far one of the most desirable and easiest models because with no money or credit, you can create quick cash immediately. I still use wholesaling to this day due to the quick success aspect. My wholesaling business is like an engine that I leave running. With it, I’m able to generate $5,000, $10,000, or even $30,000 extra per month! I can then take that money and fund my other business interests or fund the wealth-building side of my personal life.

Wholesaling is the functioning between two contracts: a Purchase and Sales Agreement, and an Assignment of Contract. That is all you need in order to go out and start creating cash right now! Your financial reward comes down to the simple concept of real estate investing.

2. Lease Option

As with wholesaling, you don’t need any credit with a Lease Option. You don’t even need an income! There is a small amount of money required for many deposits, but that is a small inconvenience to pay for acquiring Lease Option property.

The beautiful part about lease option properties is that they are often not discounted like an actual true wholesale deal. The property simply needs to keep between 5-10% of its equity in order for you to retain the property as part of a long-term lease. Another advantage of this lease option is that a final payment waits at the end of the tenant buyer’s term of residence. At the end of the transaction period, you are in a position to allow the tenant buyer to close the sale and become the sole proprietor. The difference between your purchase price and the tenant buyer’s negotiated price is your profit.

3. Rehabbing

Rehabbing is by far one of the greatest ways to quickly reach elevated success as a real estate investor. However, I must caution you, there are certain key skills and a thorough familiarity of this model that are crucial for high achievement in this niche. Also, you will need a power team in place to be truly successful as a rehabber.

If you are determined that rehabbing is your niche, you may want to find an expert in the field and partner with him at the start. Say you buy a house for $40,000. Now let’s suppose the market average is $80,000 and $100,000 on the higher end home. You can take that $40,000 house, remodel it so that it meets the standards of a higher end house. You can even add an extra bedroom or bathroom, pushing the value even higher. This is known as “forced appreciation.”

You stand to make a tidy profit when you sell your $40,000 home for $100,000! Even minus the cost of the rehab, called a “hedge factor,” of about 10-15%, you will earn a large sum for your efforts. Furthermore, you can decrease that hedge factor to around 5% once you’ve acquired some experience and you’ve attained a basic knowledge of rehabbing.

Rehabbing is what investors call a Tier 3 model. You must have the experience and knowledge to successfully conclude Tier 3 transactions. There are potential risks, but the rewards are great!

4. Buy and Hold

Buy and Hold is the ultimate wealth-building model and it takes all of the other three profit centers to accomplish this Tier 4 investment. At Tier 4 investor, you are now using the income and the resources from your other profit centers to acquire properties that produce cash flow. With Buy and Hold, you can start to generate a healthy passive income that, over time, will allow you to walk away from your job or retire early without financial fears.

The four profit centers make it possible for you to have a roadmap, find profitable investments, pick the right markets and research properties, make offers, find buyers, and close deals.

Featured images:

John Stevens writes about business and real estate. He has been working in South East Asia for over ten years and currently he is working in Myanmar. If you’re looking for a property in Yangon, Myanmar, visit www.scipioservices.com

Article written by

This article was submitted by a guest blogger.  Guest blogging provides an avenue to share a variety of different points of view with a broad audience.  It is a good way to share cumulative knowledge as well as introducing readers to a new author.  Learn more about how to become a contributor for Riches Corner.

Leave a Reply