Investing in real estate properties can be a profitable business venture. Unlike the stock market, real estate investors can use leverage to acquire their properties by making upfront payments, and later paying the balance with interest. On the other hand, a conventional mortgage may require you to make a 20-25% down payment before you can get a property. Although the real estate market has been hit hard by the pandemic, if you make smart investments, you can make gains post-COVID. Here are four ways to invest smartly in real estate properties and make money.
1)Buy rental properties
If you have the skills to manage tenants, owning real estate properties could be a profitable business idea. However, the beginning won’t be easy since you may need to have a reasonable amount of capital to acquire and maintain your properties. Owning rental properties can provide you with regular income. You can also maximize your capital through leverage. Between 1940 and 2006, data from the US Census Bureau showed that sales of new houses went up consistently, and only fell during the financial crisis. There is a good chance your rental properties will fetch you money when things normalize.
2)Real estate investment groups (REIGs)
REIGs are suitable for real estate investors who don’t have the time or experience to manage properties but want to run estate businesses. With REIGs, certified companies build apartments or condos, and allow investors to buy these properties through them. One investor may own single or multiple units of living spaces. However, the company that operates the investment group manages all the property units, including maintenance and tenants acquired. Additionally, the investment company may take a percentage of the monthly rental fees. Investors will always receive their income provided the vacancy rate of the properties does not go too high.
Real estate investors can also make money by buying houses and reselling them (flipping houses). This business can be tricky though, but if you get the hang of it, you could make tons of money as a house flipper. To flip a house, all you need to do is to purchase one that is below market value, upgrade it, and resell it at a higher price for profit. In buying houses for flipping, it’s advisable to purchase properties that only require minor repairs or upgrades. Refurbish the home, make it visually impressive, and sell it as fast as possible to avoid depreciation. When you are selling an unwanted property, you can get it off market quicker if you lower the asking price.
4)Rent out a portion of your house
Have a spare room in your basement? Consider renting it out to make some extra cash. Even if you are yet to build your own house, you could still purchase a duplex; live in one apartment and rent out the remaining portion of your available space. The good thing about renting a part of your house is that you will get to monitor the behavior of your tenants closely. What’s more, it is a great way to make money and feel like a landlord without breaking the bank. There is tremendous wealth in the property market. But, if you don’t venture into it, you may miss out on significant money-making opportunities.