How To Make Money In The Real Estate Business

The current real estate market situation presents a lot of opportunities to make money in the real estate business.

It doesn't matter whether the real estate industry in your area is robust or weak or the housing market has tanked because the population is always increasing and people will always need shelter and that directly implies that there is always room to make money in the real estate business especially in the housing sector, in any market situation.

Any market situation is always an opportunity, regardless of however depressed the market is. And this can be true in any country. To cite an example, in July 1997 during the heat of the Asian Financial Crisis the prices of all real estate properties all over Asia went down by 40% - 70% off their regular price and yet there were no takers because it was an issue of over-supply and overly priced market situation.

Currently in the US the housing market is also down with housing foreclosures all around, in some instances whole rows and blocks of houses were foreclosed by creditors, making the community look like a ghost town. With this kind of situation, most financial advisers won't recommend that you dip your fingers into the housing business at this point. But I disagree, strongly disagree. And I don't say nonsense here because I have proven the facts that I write here. And besides, most financial advisers are not into the housing business, by the way. They make advice but they don't invest, they are afraid.  Just read on to know how.

Before I will share to you how I make money in real estate these days regardless if the market is down or up, let me first go back to how I learned the tricks and secrets of the trade. It was in July 1997 when I got my 'baptism of fire' in the real estate business, it was when the real estate bubble in Asia popped and I was doing business in the Philippines that time.

Foreclosed properties by banks and other financial institutions were all over the place, the banks' borrowing rates have almost tripled (as their normal reaction to cover their losses), and the foreign exchange rate have spiked up, and the local currency (Philippine Peso) was devalued that I thought it was already the end of the world.

The upper middle class and the rich have lost their big and classy and very beautiful homes and nice mansions and condominium units and some high-paying jobs were gone too, while some were offered 50% cut on salary or the option to be terminated for cost-cutting reasons otherwise their company will fold.

But I remembered what my former chinese boss used to tell me that "one man's problem is another man's opportunity". These words became alive in me and I saw the light and realized that those who used to live in elegant homes have lost their dwellings to the bank, but not their money and for sure they need to have something decent for shelter.

So we asked ourselves how we can make money from them, what service can we give them that they will surely take and pay. That time all construction activities were either put on hold, or have slowed down or have totally stopped and were abandoned. This resulted to a downward spiral of the prices of all construction materials because the suppliers and manufacturers have produced so much and maintained huge inventories but there were no takers anymore.

That situation gave us an idea to put up elegant looking, well planned houses with downscaled floor areas to make it attractive and affordable to the rich and the upper middle class who just lost their homes. The good thing is the cost to construct was lower by 40% than the usual because of excess inventory of construction materials, everything was discounted. They just wanted to liquidate whatever they have in their stores and warehouses - a situation that we really took advantage to the hilt!

In short, our small, pocket subdivision with houses that had really attractive facades sold out fast. These houses looked nice and feels much similar to the houses that our clients used to live but smaller in size and yet complete with the house features that they used to enjoy. We threw in some landscaping to make it more homey and attractive to them. Because no bank was willing to loan out money unless one was willing to take it out at 42% per annum, we were forced to provide them in-house financing at 24% per annum provided that they pay 30% downpayment upfront, or 40% downpayment over 12 months. Of course we did not tell them that the cost of the house is only 40% of the selling price!

This scheme became very popular to them because their other option was to rent. We were able to help them have their new homes that cost almost half than what they used to have but with almost the same house features except that the floor area was reduced to almost what is required by the local building code.

We made money fast because the units only cost us around 40% of the selling price, so when they pay us 30% upfront we almost got the whole investment and we were able to construct more houses, and the remaining cashflow already represent our profits! Because of the strong demand for that kind of quality yet affordable housing, we recycled the idea over and over until we made 5 pocket subdivisions using the same concept.

It also helped that there was not a single competitor because those who were in the housing business before, especially the big players, had large loan exposures and they were having a hard time servicing them so they stopped selling to avoid incurring added liabilities. So it gave us their large market.

But at the present time, how can you make money from real estate? If you are in the US where the housing sector is so down, there is a lot of ways to make money with the current conditions. Just imagine, how many families have lost their nice homes to their creditors. The prices of these houses that were foreclosed by the banks have gone down by 30%, 40% or even 70% in some cases.

Go to these banks and inquire about how you can acquire these foreclosed units and you will be surprised that they will be rushing in to help you acquire one because banks always want to unload foreclosed assets, especially those that are depreciating fast like these houses. You can negotiate to get the units at 10% downpayment payable in 6 months, and the remaining 90% balance payable in the longest term that they can afford, say 10 years or more, that depends on the bank. Just haggle and don't give up easily. You can adjust your term a bit but everything must be to your favor, not to these bankers.

Then if you were able to get the best possible term, don't sign any paper yet, ask them to allow you to see and inspect the units and do your own valuation, then assure them that you will be coming back, you just need time to compare with the other banks' foreclosed assets which you should do, but at the same time that will give the bank an impression that you are a serious buyer who knows what you want.

Then visit the local building authorities if they will allow you to reconfigure the interiors and exteriors of the house or even subdivide the lot. The idea here is if they will allow you to subdivide the lot then you can convert the house into a duplex with minimal cost and sell 2 units now out of the original single unit - making the price more attractive and affordable to a wider market.

But if the local building official only allows interior reconfiguration and not the lot subdivision, you can convert that single house into a duplex, triplex or even quadruplex by reconfiguring the interior partitions, putting in additional firewalls and adding some windows here and another door there - enough to house 2,3 or even 4 families comfortably but make sure that you don't go below the required minimum room floor areas by the local building code. Then you can offer the revised or reduced units to 2,3 or 4 families for rent. Your only roadblock here is if the homeowners association does not allow you this scheme, if that's the case you can negotiate and ask their permission and authorization in black and white to protect you from future legal harassment.

The money that you make from rental revenue should be more than enough to duplicate this process one more time, maybe do it on the next house so it will be easier for you to manage. To avoid collection hassles, the better for you if you can require your clients to give you post-dated checks for the next 12 months to be replenished every 3 months.

If these scheme becomes too attractive that you need more units to convert, you can sell your receivables by showing your rental agreements and the post-dated checks to the banks where you got your properties, surely they will be glad to do business with you, especially if they give them some favor by opening a deposit account with them for your house rental business.

That's one excellent way to make money in real estate especially in the housing sector - getting one big house at 30% to 70% off the regular price, convert them into duplex, triplex or quadruplex units and either sell them or rent them out. That should bring you a lot of money. I am doing it here locally.

There are still many other creative ways to make money in real estate because this is one of my forte and I am deeply into it for many years but I will share them in my next posts. You may send your reactions to this business idea by posting a comment below or by sending me an email by clicking here and I will be glad to serve you.

6 Proven and Simple Ways To Save Money

Every time you part with your money to buy something, in reality you are making other people richer than you are. So if you want to keep and save more of your money, then read on and check for yourself these proven and yet simple ways to save your money.


1) SAVE MONEY FROM BOTTLED WATER

The real cost of these bottled water is 60% less than what you normally pay for one bottle. Whenever you buy a bottled water, you are not just buying the water per se but also the bottle, the bottle cap, the plastic label and the brand name that does not in any way contribute to easing your thirst for water. Instead, why not reuse that bottle, fill it up with your clean tap water and bring it with you and nobody would know that it's not fresh from the grocery shelf. But you have saved some 60% of the cost every time you do that. Remember, money unspent is money saved and money gained.

2) CELLPHONE UNIT
Because of the stiff competition among telecommunication service providers, most major telcos offer free and attractive cellphone units when you apply for a phone service plan. And they even offer unit upgrades after 2 years or whenever you renew your service plan. This is most beneficial and cost effective to those who use their cellphones regularly. The cost of that cellphone unit is the money you save because you do not have to pay anything for your cellphone unit when you subscribe to a service plan.


3) COMPUTER SOFTWARE

If your computing only requires some basic computer software to write letters and documents and make some digital spreadsheet computing, don't bother to buy those branded computer softwares. You can save much of your money if you just instead get those great alternative open-source softwares that are completely free and can be downloaded online, the most popular of which is OpenOffice. Just compute how much money you can save. I myself use OpenOffice at home.
4) CREDIT CARDS
Somebody said: "Never use your credit cards for credit, but use them only for convenience!", which I very much agree. I myself have credit cards, but these credit card providers have not earned anything from me yet in terms of monthly interest. This is how I save money from credit card interests and charges:


Only start charging your purchases after they compute the Billing Statement for the month. Meaning if they compute their billing statement every 5th of the month, make sure that you have zero balance on the 4th and 5th of the month. Then you can start charging your purchases starting on the 6th of the month.


So even if the due date comes, say on the 27th of the month, you have nothing to worry about because your Total Net Amount Due in your bill is still zero. But just make sure that you pay everything that you have charged to your credit card before they compute again for your next billing statement so that there won't be anything that they can charge you with interest charges or finance charge. With that, you were able to use their money for a month without being charged with any interest. That again is another way to save money using your credit card.

4) NEWSPAPER & MAGAZINE SUBSCRIPTION

Since the time I learned to browse the internet, I stopped all my subscription to Time Magazine and my favorite national business daily newspaper. Not that I have anything against these traditional printed newspaper. I just find it more practical to me to get my business news online for free, in fact I automatically get the news I want through these RSS news feeders. So for all these years, I saved the money that I used to pay for my annual subscriptions for these newspapers and magazines. And that's a lot of annual savings!

5) PET DOGS & CATS

People like to have pets, I myself used to have pet dogs and birds. Until lately, I realized that the imported animal food that I buy weekly from the nearby pet shop is already draining my money, so I auctioned all my pets which have been with me for several years, so in that way I made money from my pets and my regular expenses for pet food and regular clinic visits and pet vaccines have stopped. And the money that I regularly spent for taking care of those pets have become my money saved!


And I would even encourage you to help someone in need, like the homeless kids or homeless family in your town or city. Or maybe the abandoned and neglected elderly. Rather than taking care of pets, help take care of precious people instead, and you will surely make others happy, and make yourself happy too, because not only that you were able to save money, you are able to help someone too.


6) PHYSICAL FITNESS & EXERCISE
Joining gym memberships can just be a fad sometimes, apart from the high cost of membership, the reality is you do not really have enough time to visit the gym everyday to maximize your gain out of your membership. To save money on gym membership, I suggest that you drop by your local park at 5 a.m. for a quick walk and run around the park. I found it full of fun since then, and aside from the fresh oxygen that you get in the open park, you will get to know some folks there, young and old, who can later even become your new friends and possible business partners.



In our local park, there is this group that teach aerobic dance steps, martial arts exercises, taeboo and tai chi for free. They start at 5:30 am till 7 a.m. You can also bring along your own skipping rope for your exercise, or have your own push-ups and sit-ups. Why give your money to the gym instructor and gym owner who is renting his place when you can have your own exercise in the open park for free! It can even become more enjoyable if you bring in your family and do it together.


There are surely a lot more simple yet proven ways to save money than what is initially listed here. If you have thought of other practical ways to save money, you can leave your suggestions in the comment space provided below and please make sure to indicate your name or pseudonym so I can properly acknowledge you when I update this article to include your ideas.


Thank you for dropping by and I hope this article will be helpful to you.