Basic Methods Of Making Money in Real Estate

by Jan 26, 2021Blog0 comments

Real estate is one of the best investment vehicles to make an income from. With a variety of different methods available, real estate is very versatile and flexible for all types of investors. When it comes to investing in real estate, it is always a good place to start by evaluating your current financial and life situation along with what your goals are. Are you financially secure? How does your partner feel about investing? Would you like to be passive or hands-on? These are some of the many questions you must ask yourself before investing in real estate. Once answered, you can now make a better decision around which method you’d like to pursue when it comes to making money in real estate.

Rental Property Investing 

If producing a consistent source of income every month is important to you, then you may want to look at the method of investing in rental properties. When looking for rental properties, you want to first make sure that you are purchasing a good deal. You may either use financing or cash to purchase the property. When choosing a property to purchase, you should confirm what the rental rates are for similar properties. When you rent out the property, you should charge rent based on the market rate but also confirm that this is enough to cover your expenses for the rental property. Anything left over is your profit. How much you want to earn per deal should be the criteria you establish. It is important to run the numbers before purchasing a rental property. Essentially, this is a very straightforward approach to real estate investing and could potentially produce a significant source of income over time. 

Fix and Flip 

A commonly known strategy for making money in real estate is the traditional fix and flip. To complete a successful fix and flip, an investor must purchase a property at a discount price, renovate the home, and then put it back on the market at a higher price for a profit. You get to keep the difference between your cost and what you sell for. Fix and flips are a good opportunity to make a significant amount of money in a transaction. Sometimes the fixing up required for a home comes down to minor cosmetics such as replacing the flooring, putting on a fresh coat of paint and updating the kitchen or bathroom. Note, when investing in fixing and flips, it is important to have a firm understanding of what the scope of the project may be. You should walk the property with a contractor before purchasing to get a good estimate on what your costs may be. 

REIT Investing 

One of the most basic forms of investing in real estate and also the most passive is buying into REITs. A REIT is a real estate investment trust which is a company that owns and operates income-producing real estate. Shares can be purchased like a stock. In return, you are rewarded with dividends either monthly or quarterly from the income produced by the REIT. 

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