Once you become a real estate investor you will get quite used to answering two questions over and over again such as
- What exactly do you do? And…
- Is it good money? AKA: How much do you make?
So I thought, why not try to demystify one of the most common questions that is constantly popping up.
In this post, I will attempt to answer the question: How much does a Real Estate Investor Make?
Since every single area is different, it would be wrong for me to toss a blanket income across the United States. I am a living and investing in Buffalo, NY, (GO BILLS, ha-ha) therefore, the numbers I use will reflect what is normal and probably happening in Buffalo, NY. If you are not living in Buffalo, NY, simply look up your city and county’s most recent median income by performing a google search, then grab a calculator and keep reading.
Finding Your Baseline
My Baseline: I live in Buffalo, NY which is in Erie County so here are my numbers:
Buffalo, NY Median Income $33,000
Erie County Median Income $39,000
Using both of these numbers, I get an average of $36,000 median income which feels accurate for Buffalo, NY. Now I’m sure if you live in New York City, Denver or San Francisco $36,000 would be extreme poverty so, remember to use YOUR area’s most recent median income results to get your baseline before proceeding. Go ahead….I’ll wait.
So, using $36,000 as my baseline in Buffalo, NY, here is a rough idea of how much money real estate investors are making in my area – based on their experience. To see the estimated salary of a real estate investor in your area, simply calculate the provided formulas throughout the post.
Newbie Real Estate Investor Salary
As a novice real estate investor your income from real estate will likely fluctuate in the range of 0 – 50% of your area’s median income. A newbie probably has another job in order to pay the bills and limited time to devote to earning an income through Real Estate. Getting the first few deals completed are the only way to get out of newbie zone.
Likely Annual Income Buffalo: $0-$18,000
Likely Annual Income in Your Area – Multiply Your Median Income x .5
Seasoned Real Estate Investor Salary
A Seasoned Investor might have a small portfolio of rental properties or has completed a handful of flips. A seasoned investor knows the ropes well enough, but might be stuck due to lack of financing or holding a second job. They know exactly HOW to make money in real estate but there are factors limiting their growth. Seasoned Investors might earn $100,000 one year and $25,000 the next. Overall, they hug the median income, give or take 20%.
Likely Annual Income Buffalo: $25,000-$45,000 with sporadic highs and lows
Your Area – Multiply Your Median Income x .8 (low)
Your Area – Multiply Your Median Income x 1.2 (high)
Professional Real Estate Investor Salary
A professional Real Estate Investor has a mix of rental properties and flips or they specialize in one area. Professionals spend a good amount of time networking with other investors and are probably not going it alone. Deals come to them. They are focused, and have funds ready and waiting to pounce. A professional real estate investor consistently and reliable earns above the median income levels.
Likely Annual Income Buffalo: $40,000-$100,000+ – consistent.
Your Area – Multiply Your Median Income x 1.1 (low)
Your Area – Multiply Your Median Income x 3 (high)
Financially Free Real Estate Investor Salary
Andy finally, let’s not forget about the investor who is financially free. In all of the above categories, Newbie, Seasoned and Professional, these investors are working for their money. While they may generate some passive income, it’s not enough to cover their monthly expenses. They must continue to work and earn their salaries in order to support their lifestyle.
A Financially free real estate investor may not always generate as much income per year as the professional or seasoned investor earns, but the key is they generate income passively while enjoying their hobby, or vacationing, or volunteering, or learning new skills.
Somewhere down the line, the Financially Free Real Estate Investor learned that GENERATING income is far more important than EARNING income and they might spend free time pursuing other passive income streams. They are asset driven vs. income driven and are acutely aware of their finances. Their income is enough to cover all of their living expenses and have some left over. While a financially free investor‘s income is very individual. It’s usually at least slightly above median income and goes up from there.
Likely Annual Income Buffalo: $40,000+ – consistent salary and without working for it.
Your Area – Multiply Your Median Income x 1.1 – consistent salary and without working for it.
I know this is a very broad analysis of what you can expect to make as a Real Estate Investor and results will vary. But these generalizations, at the very least, can help set your expectations as you identify where you are in the process vs. where you’d like to be.
Now who’s ready to move to Buffalo?
To your success!