Buy low, sell high

This is what most people envision. The investor buys up properties just before the occurrence one of these housing bubbles that the news talks about, then sells the properties after a few months for huge profits. Does it work? Only occasionally.

By the time you hear about a housing price surge, it’s already too late. The market will already be saturated with other investors and will often be near its peak. Yes, with luck it’s possible to make money with this type of investment. With luck, you can make millions buying lottery tickets, but don’t plan your retirement around it.

Rental properties

Buying rental properties, whether single-family homes or apartments, is a much more reliable way to generate income. People always need places to live, and the key to self-employment success is to offer a product or service that people need.

Rental properties can be work intensive�"especially when the property is vacant. The owner has to find and interview tenants. The properties must be maintained. Tenants can be demanding and unreasonable.

A property manager can insulate the owner from these problems, but that brings a different set of problems. The owner is turning over a lot of financial responsibility to the manager and a bad manager can really hurt a property’s revenue. In addition, the manager’s salary reduces the owner’s profits.

Sweat equity

For those who don’t want to deal with the uncertainty of timing property markets or the headache of tenants, there is another alternative. The investor buys a property in a neighborhood with good sales turnover, preferably a property which is selling for a below average price due to damage or generally poor maintenance. The investor makes the necessary repairs, cleans up the property, and improves the home’s appearance, and then resells it.

This is another strategy that requires time and effort. The work can be subcontracted, but again the cost of the subcontract cuts the investor’s profit.

Build a good team

For an investor who is serious about making a living in real estate investment, a team of qualified professionals should be assembled before even one property is bought. This includes an attorney, escrow company, insurance agent, mortgage broker, and of course a good real estate broker. The more experience each of these people has with real estate investment, the more profit you are likely to make.