Whether you are an investor or a property agent, real estate can be a great way to make money in the long run. Not only does real estate investment have the potential to offer excellent long-term returns, but also these property investments often have excellent tax benefits. In other words, real estate investment can add value to your business and diversify your overall investment portfolio. It has offered financial freedom to millions of people and led them toward success.
However, several methods and tactics can help you to make money by investing in real estate. From renting the property to investing in REITs, there are numerous money-making strategies. This article will focus on how to make money through real estate. It will highlight both money-making techniques and opportunities that can help you to get long-term returns from real estate investment.
5 Amazing Ways to Make Money in Real Estate
Investing in Real Estate Properties (Rental Real Estate)
One of the most prominent and unique ways to make money in real estate is to buy a property for investment purposes. You could buy a home and rent it out to long-term tenants or buy a multi-floor rental property. Vacation rentals are top-rated these days. You can temporarily rent your fully furnished house or apartments to tourists or convert them to manageable resorts. You can get long-term returns and profit out of it.
Long-term rental is a good option to get high profit and passive income if there would be a healthy market of renters in your location. To increase your ROI, you should keep an eye on local listings, Facebook marketplace, and other property dealing sites to get a sense of how often people are looking for rental places and how similar listings are charging for the same.
Go Digital with REITs
Digital investment in a property through REITs is another better option to make money from the real estate business. A REIT, known as a real Estate Investment Trust, is a particular investment company designed to deal in real estate assets and properties. You can use REITs as a sort of a mutual fund in the field of real estate investment where you can pool your money to buy a portfolio of commercial apartments, buildings, and other real estate assets.
REITs investment scheme, formed in 1960 as an amendment to the Cigar Excise Tax Extension, allows inventors to buy shares in commercial real estate properties (portfolios). However, diversified and specific REITs hold different commercial portfolios related to complexes, data centers, healthcare facilities, infrastructure, warehouses, etc.
Most REITs are traded on the stock exchange market and are very easy and practical in buying and selling properties. So, if you are a beginner looking for the best and less risky investment option in real estate, REITs are suitable for steady income.
Fix-and-Flip is the strategy of buying a property at minimal cost, renovating it, then selling it at a high profit. Flipping allows investors to purchase properties at a discount rate, and after aesthetic updating and renovation, they sell out the property. In other words, flipping refers to buying an asset with a short holding period to sell it for instant profit.
If you are looking for an instant earning option in the real estate field, flipping is good to go. Fixing can be taken as a lucrative subject to get high returns if you know how to find properties to fix up. The cost of acquiring a property plus its repairing charges are the fix-and-flip value, but that’s not what investors want.
In such cases, investors should focus on the after-repair value of the property, which helps them acquire an approximate property value. In short, the difference between after-property repair value and fix-and-flip value will be the investment profit.
Other Ways of Making Money in Real Estate
Another prominent option to get benefits from the real estate business is residential property investment. In this case, you have to pay a fee or premium to have the right to buy a house for a specific period. Then, you can find the investor who will be ready to pay more than your agreed property price. In this case, the premium you will get is like a finder’s fee for finding the person looking for an investment – no different from a real estate agent’s commission.
Other options include –
This option includes purchasing a home from a lender when the mortgagee is behind on payments. Short sales are often a time-consuming and sophisticated proposition.
If you have multi-unit apartments or properties, you can go with the lease option. If you are taking any property on lease in the future, it will benefit you, and you can buy later at a lower, pre-set price. You can also get high returns by selling your purchase rights.
The options mentioned above are proven strategies in the future that can help you make money in real estate. Public REITs issue shares are from traded on stock exchange based on the stock exchange. While private REITs are known as non-traded REITs, they are not available in any business. You can also target other exchange-traded funds (ETFs) to get high returns.
You can also make money from real estate investments involving special services and business activities, like renting your residential properties by registering them under OYO, AirBnB, etc. These investments almost always require sub-specialty knowledge. For instance, you need to take help from experts who can spend most of the time specializing, planning, and operating such vacation rentals and other real estate business activities.