How to Make a Fortune in Today's Real Estate Market

You don't have to be Donald Trump to make money in the real estate market. You just have to be smart. Yes, you need a little bit of capital to get started but it's not impossible to quickly build wealth with a few smart investments.

Instructions

1. Know that most commercial properties are sold by the building. However, a developer may decide to break down the building into smaller units if he wants more money to expand the project or wants faster returns.

2. Expect to be able to set attractive leasing rates, if you find a building in an area with high demand and low supply. Not only can you charge higher leasing rates, resulting in considerable cash flow and impressive returns, but you can expect higher appreciation.

3. Set rental rates based on price per square foot. The average in the United States in 2007, for example, was close to $22/square foot. If you buy an industrial building, it will likely rent at a lower rate, but it will also cost you less for overhead than an office building.

4. Benefit from longer lease contracts than what residential investors get. While apartment buildings may offer month-by-month or one year leases, commercial leases can last anywhere from 1 year to 10 years or longer. As the owner, you have stability and know exactly how much cash flow you'll benefit from.

5. Avoid getting bogged down by the rules and regs. Between the taxes, maintenance and purchase mechanics, you can get buried by the legal issues. To be successful, you have to have specialized knowledge of the market or at least have a team of knowledgeable professionals.

6. Invest the time and cost into making your properties successful. Every commercial leaser has different needs which require more time on your part, renovating and transforming your building to meet their expectations.

Tips & Warnings

• Always check the local economy before buying a piece of property. Use the Bureau of Labor Statistics to examine employment rates.

• Go through commercial real estate listings before purchasing a building. If there are too many properties on the market, it'll be harder to make yours successful.