Investing in a real-estate business has always been one of the most lucrative businesses of all times. In fact, real-estate has a history of producing more wealth than any other industry. Despite how lucrative and appealing it sounds, many people are reluctant to enter the business because they have some preconceived notions about the world of real estate.
First, people think that they need an enormous amount of money to enter the real-estate market. Second, people think that the market is dynamic, and investing will be very risky. However, these assumptions are not factual. It might have happened to some people in some cases, but this generalization is not applicable to the whole market at all times.
Therefore, if you have doubts about making money in the real-estate market, then you need to clear some of your misconceptions. Read on to find out the seven ways in which you can make money in the real estate industry.
1. Rent your house out on a long-term basis
The most common and the easiest way to make money out of real state is to opt for residential on a long-term basis. People are always moving from one place to another and need a place to live. If your house has a good location, you will be able to reap two benefits out of it. The first one is that the asset value of your house will continue to grow. High-in-demand location – a central location in a busy city, or near offices, is ideal for people because it saves transportation cost and commuting time. The second benefit is that your house will always be in demand because of its location. Anyone would be ready to rent it for a long-term period quickly. Therefore, if you’re looking to make money out of your real-estate property, choose a good location and rent it out.
2. Finance Lease
A finance lease is one of the best options to buy properties. In this approach you do not need to have great credit in the beginning, neither do you have to put up a huge amount of capital because you are leasing a property with the option to purchase it. This works very well when the real estate property values are increasing because then you can create a pre-set price and then purchase the house later.
3. Flipping homes
This is also a tried-and-tested method that brings in money in real estate business. Flipping means that you purchase a home that needs renovation, so you renovate it and then sell it for a good price. However, if you don’t have enough experience in the real-estate market, then this could be a tricky situation because you might not know which house is worthy of being renovated and resold for a good price. You must also think about other costs such as financing cost, agency and capital gain tax.
4. Wholesale houses
If you do not have tons of capital to start, then wholesaling a house is a good money-making option in the real-estate market. In fact, this is the only way to invest if you do not have a huge capital to invest in a property. How does it work? Investing or real-estate professionals search for undervalues homes and put them under contract with different provisions for a brief period, and then they find a buyer who is ready to purchase it for a higher price. The difference in amount is your profit.
It involves buying a property and sell to another person as it is. For a wholesaling house to work, you sign an agreement to buy and immediately look for a buyer who typically pays cash. You will assign the contract to the buyer, double close or simultaneous close.
5. Vacation rentals
Another good way to make money is to buy vacation houses and then rent it out to people who are visiting a city or vacation spot. It is a very lucrative method to make money out of your real-estate property. You will have to look for a location where many tourists go each year. Some people also buy houses next to beaches which are high in value. When people are on holidays, especially during the summer in Europe or Winter in Africa, they love to rent out beach houses. These vacation houses require regular renovation because of wear and tear due to the house’s proximity to the sea, but they are extremely lucrative. Buying a vacation rental is also beneficial for the one who is buying it because the next time they want to go on vacation, they can stay in their own house and wouldn’t have to book a hotel room.
6. Commercial real estate
The commercial real estate is another great way to make money in investing. Companies are often in need of a good location to start an office, or they need space for their retail outlets. In fact, one can earn a huge amount of money through this venture. Commercial real-estate dealers often flip properties, renovate and upgrade the property to increase its value. However, one must be experienced and know how to add value to the exchange. There are many instances when people invested in the smaller commercial real estate but moved on to opening up shopping malls and successfully developed massive buildings for offices. However, that happened at an advanced state when those people became highly experienced in dealing with the commercial real estate.
7. Investing in land
Some smart real-estate professionals also invest in buying land instead of buying houses or building. Although you cannot easily rent lands, there are always property companies and bigger real-estate investors who are looking for good locations to build their properties. Land in a good location can be leased for farming or directly to other companies for a long term.
Above list explained seven ways to make money in real estate. However, you need to thoroughly assess any potential deal before investing huge money. Real estate can be profitable but only for those who understand how to make a profit out of it.
About the Author :
Catherine Park is a professional Content Writer and a blogger with full of energy and positivism. She is an expert in writing exclusive contents on business and technologies that are helpful for large enterprises, SMEs and business startups including real-estate property.