Fast real estate profits require elbow grease

Part 3: How to start investing in real estate
By: Robert J. Bruss: Inman News
There are many methods to become very wealthy, or just modestly wealthy, with your real estate investments. Although I have personally done "pretty good" investing in real estate, many of my friends, college real estate students and subscribers have done much better. I'm extremely happy for them! This four-part series will explore the question: Why do I want to invest in real estate? (See Part 1: First-timers find a place to call home and Part 2: Single-family homes best spot to sink money.)

3 – I want to earn quick real estate profits. Real estate investing is not a get-rich-quick overnight technique. Yes, I know real estate investors who buy run-down fixer-upper houses, apartment buildings, shopping centers, hotels, warehouses and office buildings who have earned "fast" profits in less than 12 months by either selling after fix-up or refinancing to take out tax-free refinance cash. But such fix-up profits usually involve a dirty little four-letter word, W-O-R-K, which many investors dislike.

Occasionally, in the stock market it is possible to earn fast profits by purchasing an undervalued stock you anticipate will increase substantially in value during the next few weeks. But that is a rare event. Because of stock-market volatility and losses, many common stock-market investors have switched to real estate investment properties, especially rental houses, which don't plummet in value overnight.

Some investors think buying REIT (real estate investment trust) stock is a great way to earn big real estate profits without work. Although many REITs have done very well, especially because REITs are required by law to pay out 90 percent of earnings in dividends to their stockholders, REIT investors are at the mercy of the REIT managers. Such REIT purchases are really not real estate investments, primarily due to the individual investor's lack of control. Rather, they are stock-market investments that have most of their assets in real estate.

It is possible to earn quick real estate profits. The technique is called "flipping." That means you acquire a property at a bargain-basement below-market value purchase price, perhaps fix it up a little, and then quickly sell it at a profit. It has been and can be done. The problem is once the investor stops buying and flipping properties, the profit income also stops. Equally important, those resale profits are taxable at ordinary income tax rates if the property is held less than 12 months.

A recent book I recommend on this topic is "How to Be a Quick Turn Real Estate Millionaire" by Ron LeGrand. Be sure to order and listen to his excellent free CDs, especially the one on land trusts, which come with the book purchase. But be aware his relentless telemarketers will then try to sell you more products and seminars. I also have a special report, "Pros and Cons of Flipping Houses and Investment Properties for Fast Cash Flow Profits," which might interest you.