How to Invest in Real Estate and Earn Money
There are more ways to invest in real estate and earn money besides buying a property. Making an investment in real estate is a popular way to increase one’s earnings, as it is quite lucrative. However, even if you don’t have great financial potential to buy a property, you can still invest your money in real estate in some other ways. Keep reading to learn more about how you can invest money in real estate and earn money.
The first, and the most popular way is to invest in property and increase its value. The second popular way is to buy real estate - although not everyone can afford it. Nevertheless, if you want to start making money from real estate, you can do that even without buying property. Moreover, you can also have regular cash in from a property. Real estate is one of the most popular alternatives when it comes to money investments as it is the safest and with great potential.
Essential things to consider before making an investment
Before you decide which way to invest in real estate, it’s important to consider a few essential factors. First, you should consider how much risk you are willing to take. There are investments that are low risk and there are ones with higher risks. Sometimes, the local housing market dictates certain rules. One such rule is that you live in or nearby an area with ample real estate opportunities. Moreover, you should also take liquidity into consideration. Certain investments are not liquid, meaning they might not be able to sell quickly or at a reasonable price if you need the money promptly. So, not all investments are suitable for those with unstable finances.
Another thing that plays a key role in the choice of real estate investments is your capital. Some investments require quite a lot of money, while others don’t necessarily. Additionally, you should have some basic knowledge about investments.
1. Invest in property and increase its value
One of the most frequent ways to invest money in real estate is by investing in a property. Almost any property has the ability to increase its value through appreciation. In real life, it works like this: you purchase a property for $300000. Over the course of ten years, its value increases to $400000. You sell it and you’ve made a profit of $100000. This is the reason why investing in real estate is so popular. The chances that your property will be worth more than you bought it for are high, making such investments pretty profitable. Land appreciates over time, especially if you build a house or a building. Also, if you improve the existing structures. The land also appreciates if you find gold or oil on your land.
On the other hand, residential and commercial properties appreciate because of their location, development of the neighbouring area or improvements on the property itself.
2. Buy real estate
Another way to earn money in real estate is by buying residential properties and holding them. You can wait until their value appreciates or you can rent them out. When renting out a property to tenants, there are some obligations you have as a landlord. For instance, it’s your obligation to hire any needed maintenance service. Otherwise, your tenants can legally withhold paying rent. To be easier for maintenance, it would be great if your property was nearby. For instance, if you live in Burwood, Sydney, you could consider buying real estate in Strathfield, which is nearby. If you don’t have time on your hands for that, you can always hire a property management company to manage your property. Most often they charge between 8 to 10% of your monthly income.
Other strategies besides renting include fix and flip - which means that you buy a property for little money, invest in it and sell it for more money. Additionally, you can rent out your property for short periods such as vacations.
3. Invest without buying property
Not all investments in real estate have to include buying a physical property. This is also a plausible alternative for those who don’t have the large initial capital. If that’s the case with you, there are some other options you can consider. For instance, you can invest in REITs (Real Estate Investment Trusts). You can also invest in MIC (Mortgage Investment Corporations) or REIGs (Real Estate Investment Groups). Find out more about each of these to make the right investment.
4. Have regular cash in from a property
When you own a property, you can either wait until it appreciates to sell it or you can choose to make steady cash in from owning a residential or commercial property and raw land. The most common way of making money is by renting out your property. The rent should cover some costs such as utilities, mortgage payments, property taxes and costs. If you own a commercial property, you can rent it out to businesses.
Real estate is a vast field offering plenty of investment options. It is also pretty stable, with opportunities to earn money in a different ways. If you wish to make some investments, definitely consider investments in real estate.