As many of you know, real estate investing is a business with big paydays and long pay delays. Many investors and agents struggle to create consistent cashflow and therefore are more stressed than they should be. You’re about to learn how to generate steady income in real estate so that you can have less stress and more freedom in real estate!
3 Ways to Earn Steady Income in Real Estate
1. Purchase Rental Property
I want to highlight two challenges people don’t often consider when they think about rental property.
It Takes Time for Rental Property to Stabilize
It takes 1 to 2 years for a rental property to stabilize and produce enough cashflow to pay a percentage of your bills. People make the mistake of thinking they will have a steady income flow the moment they buy a rental property. This isn’t true, no matter how experienced you are. There are a couple reasons for this:
- You’re trying to build up reserves. This is particularly true for single-family home rentals, where if you lose the tenant you lose all the income.
- There are repairs. When you purchase a property there are usually some problems to fix and making repairs costs money.
In comparison, increasing seller lead flow is almost instantaneous. If you know what you’re doing, you will have a lot more leads coming in. The average real estate deal from the time you talk to the seller to the time you close, might take thirty to ninety days. That’s a lot shorter than one to two years. So, the first thing you need to be aware of when buying rental property is it usually takes some time for it to stabilize.
It Requires Cash
I have videos on how to buy real estate with no cash and no credit. However, that’s usually for no credit short term deals that you can get into quick and easy and then flip. Yes, you could acquire a property subject to and maybe you get the seller to do owner financing in the second position. You could also purchase a rental property long term with creative financing, with very little money down. Still, the reality is that even when you do that, you typically have no cashflow.
Usually, you give the seller some money, spend money on repairs, then maybe a few months of holding costs and finally you get the tenant in there. Those are the properties that cashflow well. The point is, you need 10 to 30 thousand dollars just to buy one rental property.
Investing in rental property can create stability, but it not only takes time for that to stabilize, it takes significant cash to acquire it.
2. Increasing Seller Lead Flow and Generating Seller Leads
Increasing Seller Lead Flow
Whether you are a real estate agent or investor, you don’t make all your money generating buyer leads or building buyers lists. Instead, as a real estate investor, the real money comes when you control the deal and have a contract with the seller. Or, as an agent, when you have a listing agreement. From there, you then can generate buyers.
When you put a property up for sale, you get a lot of buyer interest. From this you can create your buyers list if you’re a house flipper or wholesaler. You might pick up some clients as well as a result of your listings if you’re a real estate agent. Either way, seller leads are crucial to earning a steady income in real estate.
Increasing the seller lead flow means:
- If one deal falls apart, it won’t have a huge impact on your finances.
- It reduces your stress because you’re not at the mercy of every single deal you’re trying to close.
- Increasing the number of deals you have on the go creates consistency.
Generating Seller Leads
This is not as easy as it sounds. In fact, a major focus in research and development in our businesses is generating seller leads. We spend an enormous amount of time, testing and split testing because changes are always occurring.
An example of this is with Facebook, who are phasing out a lot of their targets. This is because they were coming from Cambridge Analytica, whom they’ve had a falling out with. A lot of investors and real estate agents who are running Facebook marketing are about to get hit by this. We’re going to be in great shape because we’re constantly on this subject and have been testing out some audiences for the last couple of months.
Most successful real estate investors focus primarily on lead generation, because if they have leads coming in, the rest falls in place.
Return on Investment
It’s a lot cheaper to increase seller lead flow and be doing deals, than it is to be buying rental property to create a little bit of cashflow. Lead flow costs about fifty to two hundred dollars a lead. Plus, when we talk about rental property, we’re talking about what’s called a return on investment. If you put ten thousand into it and your return on investment is 20%, that’s two grand a year. On a monthly basis, that’s less than two hundred dollars.
Ultimately, if you want to earn a steady income in real estate, it’s a lot cheaper and faster to increase seller leads. I own a vast amount of rental property and I encourage you to invest in it as well. Just recognize these two facts; it’s going to take more money and it’s going to take more time for it to stabilize.
3. Become an Appraiser or Inspector
This is important because it’s applicable more so than ever before in today’s market. Becoming an inspector or appraiser is guaranteed income, and as a real estate investor or agent, there aren’t many ways to get guaranteed fees. You may want to consider becoming an inspector or appraiser if you:
- Have the time
- You are younger
- You are making a career transition to real estate
Inspectors are well paid and although there are inspectors out there, they are a dying breed. I worked at a country club waiting tables when I was a senior in college. One of the members that came in on a consistent basis was Bob; Bob the builder. He was a successful developer of luxury homes and would wine and dine other club members to raise money for his development projects.
After I started investing in real estate, I had a property that I was getting inspected. Arriving at the property, I went to meet the inspector. At first, I didn’t recognize him, but then I realized it was Bob the Builder ready to get up underneath the crawl space and start looking at the house. Thinking maybe business was bad for him, I asked him what he was doing inspecting houses.
He told me the luxury home business was booming and that he had been a home inspector for 25 years because it’s guaranteed quick money. He could get an inspection done in about an hour and a half while his crews were building the houses. When he had some time on his hands, he would just pick up some inspection deals. It’s quick, easy, guaranteed money.
Appraisers are also a dying breed. Believe it or not, there are very few appraisers out there right now. The most difficult part of closing a real estate deal quickly right now is finding an appraiser that isn’t a month or two months behind.
This is a considerable income opportunity. I was speaking with someone who is head of the Department of Transportation for a large state. He was saying that for every five hundred engineers he can find to help engineer a new road, he can find one appraiser to hire. One of the keys to their growth is having appraisers on staff. When the Department of Transportation is expanding a road or creating a new highway, they need to buy real estate from private landowners and appraisers verify that they’re paying market value for that land.
What’s so great about this is, as a real estate investor or agent, knowing what a property can appraise for is one of the most important skills you can know.
Having the skills of an appraiser will help you as a professional in real estate even if you increase lead flow and invest in rental property.
To make it even more appealing, some states have changed the state laws and you no longer need a college degree. Why did they reduce the requirements? It’s because the market is starving for appraisers. This is a terrific opportunity. If you have the time and you need that steady income, why not become an appraiser?
The real estate business has big paydays and long pay delays. The other thing is that you have periods of time where you don’t have a lot going on if your lead flow is not completely ramped up. Guaranteed fees can be a tremendous benefit during those periods of time.