Conventional real estate brokerage is very competitive. Most brokers don't make much money. To compete with others who have been in the field much longer than you, you've got to approach things differently. Once I'd learned enough to list, sell, and to find and process the financing, I began to focus on ways to sell or buy houses without using banks at all. That enabled me to continue to create profits when all the other brokers were mired down by lack of reasonable institutional financing. I firmly believe that being able to avoid institutional financing during periods of high interest rates, or non-availability of loans, is critical to real success in buying and selling houses. Think about this a moment.
If you can sell when others can't, you can also buy or sell when others can't. That means that you might be the only buyer in slow period during which you'll be able to pay the lowest prices. You can use accumulate inventories of houses using minimum down payments or Options; then selling when low cost loan money makes the markets perk up. Typically, when houses start to sell, salable listings are hard to get, but this won't affect you. You'll have your own inventory to sell. This way, you'll maintain a superior vantage point in hot and cold markets. You can't play this timing game when you're dependent upon credit cycles for financing.
Housing is where opportunity knocks. 97% of all real estate transactions, and 95% of all the money in the market involves single family houses. My advice to those just starting as entrepreneurs is to stick with Optioning, fixing, buying, selling, and managing single family houses and mobiles. Unless you've got specialized experience, don't stray very far afield. Huge fortunes have been made by those in other real estate specialties, but rarely by newcomers and hardly ever without institutional financing. It's safer to start with housing for which there's growing demand and which has had the best sales track record for generations.
In the single family house category, mobile homes are special. They occupy a growing market niche which will become even more important as the purchasing power of American's incomes continues to slide. Currently, because of zoning restrictions, it's harder for the small entrepreneur to make a living with mobile homes. That's not to say that you shouldn't be willing to try your hand when an opportunity comes along. A small park and a few homes can produce outstanding yields, but they may not produce enough income to support your lifestyle.
Let's say you paid $5000 for a really good home which you could rent for $300 per month. Bear in mind that the tenant would also be paying rent on the ground beneath the mobile home, so the total rent might easily run more than $400. You'll find that mobile homes require less maintenance than houses so long as the tenants don't abuse them, and all the expenses of the ground would be borne by the owner of the rented land. Thus, you could expect to realize probably $3000 net profit from your rents. That represents 60% return on your investment. It would be a lot higher if you were able to buy the mobile with owner financing. This is a common occurrence. Before you get carried away, remember that you'd need about 15 of these to support a family, so keep focusing on earning a living until you've got enough.
So let's sum up. What would I do if I were to start over. I'd concentrate on learning how to buy, sell, fix, finance and manage medium priced houses and mobiles. In terms of the demographics, they should pay off even better over the next quarter century. Be sure that your particular market is not declining or losing population or seeing per capita wage rates dropping. Possibly the best advice I could give anyone would be to establish a regular income doing what you like to do, then to augment this by starting up an entrepreneurial sideline that you would willingly and enthusiastically spend long hours doing to build your estate.
