Tyler Tysdal is a man who knows just about all that there is to know about the world of real estate and we were very lucky to be able to sit down over a coffee with the great man and pick his brains on the ins and outs of real estate. Tyler is an investment manager for a private equity real estate firm and he has previously worked all across the real estate spectrum from brokerage to rental manager. The biggest question which we wanted to ask Tyler was ‘how exactly do people make so much money from real estate? And here is what he said.
Private Equity Real Estate
Let’s get started with Tyler’s bread and butter, private equity real estate. You may know of private equity groups like hedge funds which invest in stocks and shares but in terms of real estate it is a relatively new way of doing things. When the markets crashed back in the early 90s, families, groups of companies and wealthy individuals alike realized that by pooling their money together they would be able to scoop up large scale properties and collections of houses in order to make big profits once the market picked up again. These still exits today and many investors are able to count on returns of between 8-10% for their money. These groups work in the same way that they did back then, pool investment, invest wisely, make returns and share it out.
Flipping properties requires a lot of knowledge, a touch of bravery and a lot of energy but if you can get those things in place then you can do very well making money from flipping properties. The basics of flipping properties is about getting in cheap and getting out quickly for a small profit. Those who flip houses are not in it for the long term, they want get a property for as low priced as possible, they want to add as much value to the property as they possibly can and then sell it for some good profit. More often than not these people will pick up properties at an auction, usually dilapidated properties which are in need of some love, the properties are spruced up and then sold on.
The traditional approach is of course to look long term, buy low and then sell when the market peaks, we also see large number of people investing in properties with the idea of renting them out for a long period of time, which ensures that cash is constantly flowing in during ownership. In many cases we actually see landlords who didn’t buy the property with the intention of making money, but as they moved to their second home it made more sense to rent out the first. This type of property dealing makes up for the large amount of properties which are bought and sold.