Make Money in Real Estate: 6 Ways to Profit From Property
Are you planning to start investing in real estate?
You’re not alone. About 63 percent of Americans own real estate. The real estate market is a prime investment destination, and it’s easy to see why. It’s not as high-risk and volatile as the stock market and returns can be steady over a long time.
However, it’s one thing to own real estate and it’s another thing to own income-generating real estate. Your goal is to make money in real estate, right?
In this article, we’re going to teach you how to invest in real property and make a tidy profit.
Let’s start counting the money …err let’s get started!
1. Build Homeowner’s Equity
The most straightforward and hassle-free way to make money in real estate is through homeownership. Owning a home that you live in might not sound like a way to profit, but stay with us and let’s show you.
When you buy a home, the general expectation is that its value will appreciate. Well, barring extraordinary circumstances like an economic recession, the value of your home will rise over several years.
So, let’s say you purchased a home in 2010 at $250,000. If you appraise the home in 2021 and establish that it’s worth $300,000, you’d have built positive equity ($50,000).
Of course, the question here is how you get that $50K. Well, if you don’t want to sell the home, you can qualify for a home equity line of credit.
2. Sell Your Home
While a home equity line of credit enables you to tap into your positive equity, at the end of the day that’s a loan, which you must repay or risk losing the home.
You have the option to sell the home if you want to cash in on the positive equity. However, keep in mind that there’s no guarantee that you’ll sell the home at its market valuation. It largely depends on how hot the market is in your locality.
Plus, selling your home will render you homeless. Unless you want to rent a new home, you will have to step into the market and buy another home.
3. Rent Out Your Home
There’s still another way to make money off your home: just rent it out.
You could rent out the entire home. This is ideal for people who have a second home that will become their primary residence. Or maybe you want to rent a home in another neighborhood, city, or state.
It’s also possible to rent out a part of your home while you’re still living in it. Either of these options effectively makes you a landlord.
4. House Flipping
How does buying and selling houses at a profit sound?
You’re probably thinking that this is the job of a real estate agent and to do the same you’ll need to get a real estate agent license. Well, you’re not entirely right.
It’s true that real estate agents sell and buy houses, but they do so on the behalf of their clients. Whether the client makes a loss or a profit is none of the real estate agent’s business.
The business of buying and selling houses at a profit is called house flipping. Anyone can become a house flipper with the right house flipping software, real estate skillset, and generally being business-savvy.
House flippers scout for houses that are on the market at a bargain. They snap up these properties and either make repairs or upgrades before putting them on the market again with a markup. Or, they can just wait for market conditions to improve, which means the properties will naturally gain some value, at which point they can be sold at a profit.
House flipping is capital intensive. You need to have the money to purchase a property as soon as it hits the market. If you hope to secure a hard money loan, you might find that someone else already snapped up the property by the time the loan is approved.
5. Build/Buy Rental Units
This is the most popular way to make money in real estate.
When you think of becoming a landlord, the first thing that comes to mind is someone owning a rental unit. This could be a house they built from scratch or bought. Or they developed a residential establishment with multiple units.
Which option do you want to pursue?
It primarily depends on your finances. It’s cheaper to buy or build a single unit than it’s to develop a multi-unit property.
Whichever option you choose, becoming a landlord is a foolproof way to make money in real estate – as long as your unit(s) remain occupied.
6. Vacation Rentals
In the past, the only meaningful way to make money from real estate in the vacation and leisure industries was to build a hotel or resort. That’s changing!
Today, even a homeowner can make money using the vacation model. Platforms such as Airbnb are enabling property owners to get into vacation rentals. All you have to do is convert your property into a vacation rental.
You could also join a vacation club, like the Disney Vacation Club. This enables you to join a timeshare program, whereupon paying a certain sum of money, you get the right to use a vacation property for a specified amount of time.
You can, later on, sell your timeshare, potentially at a profit. Check out this info. for DVC sellers.
Make Money in Real Estate Like a Boss
Real estate is a massive sector. There are a handful of opportunities you can pursue. With this guide on how to make money in real estate, you now have adequate information to get started.
All the best and keep tabs on our blog for more realty tips and advice.
