Real estate investing is still considered one of the best ways to maximize your return on investment. Read this article to learn the best ways to make money in real estate.
Did you know that the value of all U.S. homes amounts to a whopping $31.8 trillion? Or that the nation’s real estate market sees over 5,000 existing homes sold every month?
Shocking but impressive, right?
All these tell us that real estate is one of the best places where big money is in. It’s also why real estate investing continues its reign as one of the most effective investment strategies today.
The question is, how exactly do you profit from real estate investment?
Don’t worry. That’s a question that we’ll answer in this article.
So, keep reading to learn about the strategies that can make you a profitable real estate investor!
1. It’s All about Location
As you think of ways to invest money, a question that will often pop up is “where.” As in, “Where exactly should I put my money in?”
Now that you’ve learned real estate is one such place, you need to ask a similar question. Where exactly should you buy a property from?
Keep in mind that location affects everything about a piece of property.
It has a direct impact on (let’s say a home’s) overall livability. As such, it influences how much profit you can make when you buy a house and then put it up for sale for profits.
Think about all those relevant questions about how safe the neighborhood is or how low crime rate is. Or how convenient and accessible a home is from hospitals, markets, schools, and more.
All these have something to do with the location.
Say, for instance, you buy a cheap house. In the hopes of attracting more buyers, you put all the bells and whistles in it. Things like an amazing garden, high-end appliances, a patio, and so on.
All these won’t matter if the property is too far from civilization. If your potential buyers find out it’s not that convenient to get to work from, you can expect the property to sit unsold for a long time. The same goes true for properties in a flood-prone area.
2. Buy Land and Develop It
Another good strategy when it comes to investing in real estate is through land development.
As a city expands and grows, the land outside its limits also grows in value. That’s all thanks to the raw land attracting potential developers to buy it.
From there, developers then build residential and commercial structures. The more neighborhoods they introduce, the higher the value of that land gets.
Even if you don’t have the financial means as a huge developing company, you can still profit from buying raw land. You can have a house or commercial building constructed on it, and from there, either sell it or look for long-term tenants.
3. Sell a House for Cash
Have you ever seen an ad that says something like “We Buy Houses“? As long as you find a buyer, you can make a quick profit from selling a property, even as is!
This is a good idea for properties that you don’t have any intention of or time for renovating.
For instance, you’ve acquired a house as an heir or heiress. Another is when you’ve already paid the entire mortgage on your house and are now ready to buy a new one.
In both cases, a good way to turn your situation into a real estate investment is to sell the property.
Make sure though that the business you’ll sell to will give you a fair offer. Compare as many similar services (the reputable ones give an estimate) as you can before striking a deal.
4. Earn from Renting Out a House
As mentioned above, having tenants is one way to profit from real estate investment. However, you need to think long-term renters, seeing as it’s your long-term property investment we’re talking about.
The good news is, there are government programs that can help you achieve this. You can even seek financing assistance from these government agencies to get you started on your real estate investment.
What’s more, you don’t only earn income from renting out such properties. You’re also extending a helping hand to those in need of quality housing but are not as well-off.
5. Generate Income from a Commercial Building
Renting out a commercial property adds a hefty amount to your investment-generated income. The question is, how much are we talking about?
This depends on the location. But to give you some idea, a square foot of office space in Austin, Texas costs about $486. So, if you have a 29-square-foot unit, you can make more than $14,000 a month from rent.
6. Turn It into a Bed and Breakfast
Did you know that the lodging and accommodations sector is so big in the U.S. it generates $162 billion in income every year?
Why wouldn’t you want to become part of this healthy market?
You can transform your real estate investment into a profit-maker by offering such services. It’s an ideal strategy to make use of all those unoccupied rooms in your house!
To make it even more inviting to potential clients, you should consider offering additional services. A breakfast-included rate is a great way to start your guests’ morning!
7. Don’t Forget Improvements before Selling or Renting
Last, but not the least, have some improvements and renovations done before you put your property up for sale or tenancy. Installing a new HVAC system, freshening up hardware and fixtures, or starting a garden are some ideas you can start with.
All of these can boost a property’s value, which in turn means more dough for you once you resell or rent it out.
Start Making Profits with These Real Estate Investing Tactics
Real estate investing, when done right, can add that much-needed income to your finances. It’s a great way to start buffing up your family’s savings too.
Best of all, real estate investments generate passive income, so you can do other things you love while still making profits.
Want more investment tips and tricks like this? Then make sure you check our investment section!
The world of property has seen an influx of amateur investors using the sector as a springboard to financial security in their twilight years. While this was a feasible option in the early noughties, crackdowns by governments globally have made making money from bricks and mortar more difficult. Gone are the days of purchasing a home, holding onto it for a year doing nothing to it and then selling it on at a twenty percent profit. Nowadays, the rapid increases in property values are long gone. Indeed, many pads are now seeing decreases in value. The property market is no longer as buoyant as it once was.
Governments have also decided to take the unprecedented step of heavily taxing those individuals who choose to use real estate as their side hustle of choice. Capital gains taxes, as well as self assessment tax considerations, have eaten into what were healthy profits. Unless you have the time and necessary property market acumen, another investment could be worth your while. Take a look at these three potential investments that could see you better financially prepared for your future.
Motivations
Firstly, you need to consider what it is that you want from an investment. Are you looking long term or short term? High risk or low risk? Do you want to make shed loads of profit, or is ethical investing more important to you?
There are many independently led initiatives crying out for investment. These foundations, trusts, and think tanks lead world class research, initiatives, grants and policy making. The Sheikh Saud bin Saqr al Qasimi Foundation is one such entity that focuses on the education of its most vulnerable citizens in the UAE. It leads pioneering research, hands out grants to disadvantaged but driven youths and looks to engage the community and enhance the economic development of the UAE. You could choose to support one of these foundations, investing your cash and seeing your money put to good use in international development projects. The return you see on your investment may be minimal, but you will see a huge impact globally.
Alternatively, you could consider setting up your own foundation if you have the cash. While it may sound like a massive outlay and a great deal of hard work, you could be the driving force behind your own local community projects, generate funds for worthy causes and invest your own cash into something worthwhile. The returns won’t be vast, but your money is better tied up in a positive initiative rather than in the bank.
Wine
If you enjoy a tipple or two at the weekend and you consider yourself to be a wine connoisseur, why not think about investing in the stuff? This doesn’t mean heading to your local off license and purchasing off the shelf. Instead, take a look at the specialist wine brokers that dedicate their time to hunting out and trading in the finest of vintages. If you adore reds, why not consider purchasing yourself a case of 1983 riojas? Or if you love nothing more than a glass of white, consider the glorious South African chardonnays? Choose a vintage year, and you could be investing in a commodity that increases in value like art as it grows more scarce and more sought after. Store it yourself in your cellar and you could be holding onto a goldmine.
Forex
If you’ve ever fancied dabbling in stocks and shares, but don’t have a clue where to start, mastering the art of Forex trading could be more up your street. Accessible to the layperson, Forex trading is all about trading in foreign currencies. You could soon be selling the dollar against the peso and the krona against the pound.
You can set up a dummy account with one of many different Forex trading providers and hone your skills before taking the plunge. If you find that you are doing well with your mock account, it might be time to have a go for real. You’ll need some time to dedicate to this task, and you might need to purchase an extra monitor or two to follow the market forecasts and stats, but it can be a fun way to invest your cash.
Don’t always think that you have to buy a house to prepare for your retirement. There are plenty of other options out there to help you generate some much needed cash to top up your savings. Use this guide to help inspire your foray into the world of side hustles.
You’re ready to take your real estate investment strategy to the next level, and want to make this the year your business really takes off.
But if you’re playing by the rules of last year’s market? You’re going to stay stagnant — and potentially have to sell off your properties before they’ve had a chance to appreciate in value.
We know you want to avoid that. This post can help.
From helping you to better understand your financing options to mastering the basics of tax laws, read on to learn what contributes to the success of top real estate investors.
1. Never Stop Networking
Networking is, far and away, the most important step in becoming a successful real estate investor.
The larger your network, the faster you’ll learn about new investing opportunities. You’ll get insider information on the hottest neighbors, learn which real estate agents to work with, (and stay away from) and get advice when it comes to which contractors you can count on.
You’ll also learn more about the market itself, what buyers want, and potentially even find someone willing to go into business with you.
Without a strong network, you won’t survive in this business.
2. Immerse Yourself in Market News
The market can fluctuate wildly from one day to the next. And while trying to follow every little change the market makes isn’t a strategy that successful real estate investors follow?
The ones that make it are those who can identify and act in accordance with current market trends.
Knowing what’s going on in the market can help you decide the kinds of properties you should buy, when you should sell and how much of a profit you can expect to make, and when it’s best to hold.
Plus, you simply have to know the language and the current trends in order to establish yourself as an authority to buyers and others in the real estate investing game.
3. Find a Niche
Investing in real estate works best when you have a specific niche — whether that niche relates to the kinds of people who want to buy your homes or the kinds of homes you most like to buy and sell.
For example, perhaps your niche is first-time homebuyers. This means you need to find affordable properties in hip neighborhoods, and focus on amenities and likely easy access to public transportation.
Maybe you want to buy primarily luxury rentals in exclusive apartment complexes, and rent them out to people making over $250,000 per year.
Be as specific as you can here, and tailor your listings and your marketing tactics to that niche.
4. Meet with a Mentor
Whether you’re getting into real estate for the first time, or if you’ve been at it for a few years already, there’s no wrong time to work with a mentor.
Attend real estate events, get to know local agents, and show up for conferences. Approach keynote speakers in person, or shoot them an email after the event and ask them if they’re interested in taking you on as a mentor.
You might feel intimidated, but the truth is these people likely had someone help them out when they were first getting started — and they’re happy to return the favor.
This is a great way to refine your negotiating skills, get to know major players in your market, and understand what buyers are looking for.
5. Become an Expert on Tax Laws
Tax laws are changing, and you need to be certain that you keep up.
Understand possible deductions, how much you’ll owe, and everything in between.
Remember that you’re likely also eligible for tax credits and benefits — especially if you already own your primary residence.
Look for opportunities in emerging areas, as you can often find tax incentives that encourage you to make a purchase. Above all, always set aside about 10% more of your profits from investing than you think you’ll need for taxes.
We strongly suggest consulting with a tax accountant at least once a quarter, and potentially before you buy or sell one of your properties.
6. Always Plan for Vacancies
The secret to learning how to buy a rental property the right way?
Always operate under the assumption that there will be vacancies in your building.
When you’re looking for a rental property, think about the minimum number of units you need to fill in order to keep your head above water. Consider how long it will take — and how much you’ll need to spend on marketing — to make it happen.
You may find that you need to stick with a smaller or more affordable rental property.
When you’re calculating the total costs of owning properties, always factor in more vacancies than you think you’ll have.
7. Stay on Top of Your Credit Report
Especially when you’re getting into the lending process, it’s essential that you study up on your credit report.
In general, you’ll need a credit score of at least 700 in order to be approved for most real estate loans. There are certainly other options available, but they often come with shorter repayment terms or high interest rates.
Make sure you’re doing everything you can to keep your credit strong. Pay off debt first, take out smaller loans you know you can repay to boost your score and try to borrow no more than 30% of your total credit allowance.
8. Set a Baseline for Your Returns
It’s always a smart idea to set a minimum return amount that you know you’ll be happy with when you’re shopping for new homes.
In general, we suggest finding a property that will give you a minimum of 1% each month of your total sales price, or a 12% annual return.
While of course, it’s possible to earn much more than that, sticking with the “1% rule” will help you to keep your head above water.
9. Master Marketing
Real estate investors simply cannot survive without a strong understanding of current trends in real estate marketing.
You need to know how to show off properties on social media, understand the keywords and hashtags your market is likely to use, and even master video marketing and virtual home tours.
Virtual reality has recently had a huge impact on real estate marketing — and it’s a great way to get multiple offers on your homes as quickly as possible.
Brush up on your marketing skills, and watch your business grow as a result.
10. Work with the Right Lenders
Especially if you’re interested in owning multiple properties, chances are you’ll need to find some way to finance your investments.
Working with the right lenders, whether a bank, another real estate agent, or a broker, will help you to learn about new lending and financing opportunities.
You may be eligible for certain real estate loans, so take the chance to learn more about how to get a guaranteed mortgage approval.
Working with a professional helps you to fully understand the terms and conditions of a loan, and ensures you get the best possible rate.
11. Get to Know Local Neighborhoods First
Beginner real estate investors should always start by studying up on their local market.
But even as you master the tricks of the trade, always rely on local markets first. You can inspect these properties in person, understand what makes the next “up-and-coming” neighborhoods so attractive, and get in on a good thing before other investors find out about it.
Take a drive through your city and notice areas that seem to be undergoing serious changes. Talk to local business owners and get their take on how the neighborhood is evolving.
Remember, as an investor, your job is to start real estate trends, not piggyback on them.
12. Establish Your Authority
When you’re first getting into real estate, you’ll likely rely on other people to help you learn the ins and outs of the business.
But as you become more and more successful? Other people will start to rely on you.
Start a podcast, a personal blog, and develop a strong social media presence to establish yourself as an authority in the world of real estate investing. You should also contribute guest posts to popular real estate journals and blogs. You could even pad your income by offering courses on the basics of real estate investing.
Follow These Tips for Real Estate Investors to Grow Your Business
From taking the time to cultivate relationships with other real estate investors to making sure you set reasonable minimum returns, we hope this post has helped you to learn what it takes to be a success in real estate.
Looking to learn more about the most lucrative real estate investment strategies?
Want to get into other types of investment opportunities?
We’re here to make it happen. Keep checking back with us to make sure you always stay a step ahead of the market — and your competitors.
You’ve got some capital to spare and you know real estate is a guaranteed way to grow your financial portfolio and secure a healthy retirement fund.
But do you know what the best real estate investment strategies are for new investors? How do you know where to put your capital?
Here are the best investment strategies to start growing your real estate portfolio for long-term financial gains.
The Best Real Estate Investment Strategies for Beginners
Not sure where to invest your capital? Try starting with one of these tried-and-tested strategies for success.
1. Location, Location, Location
High-yield locations are a great starter strategy for new real estate investors.
Areas with high rental demand are better options for long-term investments. A low-cost capital investment may appeal at first, but the returns are also going to be lower and less stable.
High-yield areas are those with plenty of nearby amenities, schools, or attractive geography such as coastal apartments. You’ll be able to charge a higher rent than you would on a low-cost investment property. Tenant turnover will also be lower, and there is less likelihood of empty periods for your real estate.
Choose areas of growth to see significant returns on your investment, too. For example, Strong|Edge Realty specializes in Puerto Rico real estate: low capital investments for a high-profit return.
2. Depreciation Tax Advantages on New Builds
New real estate developments depreciate far more quickly than old ones. This means you can take advantage of depreciation tax breaks to greater effect on new build properties compared to older ones.
The opposite of real estate appreciation – where you flip a property investment for a higher price – the tax benefits of depreciation allow you to offset an amount each year from your rental property.
3. Renovate Older Properties
Renovating old properties and selling for a profit is a quick route to earning additional capital for new real estate investors.
You can save on your renovation costs by doing the work yourself. However, it is often more time-efficient to hire subcontractors, who will also be able to guarantee a standard of work.
With the profit made from your first renovated property sale, you can either buy a larger renovation project, multiple real estate opportunities with less work required, or turn your hand to rental investments.
4. Fast Equity Growth
Keeping the loan-to-value rate below 50% of your real estate investment is a surefire way to retain as much profit as possible.
The more equity you own in your real estate, the faster positive cash flow becomes reality. Your rental income pays off a smaller loan faster than a larger one, so you’ll see pure profit in a shorter period of time.
With this profit you can then invest in further real estate using more low loan-to-value rates to build your equity quickly.
5. Raw Land Investments
Buying parcels of raw land can be a profitable route if you know what to look for.
The land can then be divided up and re-sold or offered as a whole to a housing or commercial developer.
Seek out land that’s already near to commercial or residential utilities such as water and electricity connections. It should be near transport routes such as roads, too, in order to be attractive to developers.
6. Real Estate Investment Trusts (REITs)
If you want to remain hands-off with your real estate investments and simply benefit from the profits, Real Estate Investment Trusts are an ideal option.
You pay into a mutual stock fund which then invests your money, along with others in the fund, to buy commercial or residential real estate opportunities.
With this option you have less control over where your money goes, but won’t have to handle things like finding tenants, landlord responsibilities, or building maintenance costs.
Remember the Importance of Diversification
There are so many real estate investment strategies for new investors that it’s hard to know where to start.
However, when you’re looking into how and where to invest your capital into real estate, remember that diversification is critical.
Investing in just one strategy limits your growth options – and you could even lose money in the long term. Read more about how to diversify your real estate investments to protect your financial portfolio.
Diversification is not a foreign term, yet a lot of investors fall prey to poor diversification choices.
Diversification
And history has offered a lot of lessons. You wouldn’t like to find yourself in one investment in a recession. With many areas to invest in, how do you get a suitable and secure choice where you can place your hard-earned cash? The secret is in real estate. It is a low-risk investment that can gradually build your wealth. It is one of the safest ways to make money when you compare with other investments like bonds and stocks.
When you invest in this sector, you get a high rate of return, significant tax advantages, as well as a diversified portfolio. You get to cushion your other risky investments. However, nothing comes easy; you need to ascertain that you are ready to start real estate investments. You need to invest a substantial amount of money to get a reasonable return, hence your liquidity matters a lot. Buying an apartment or some Texas land for sale will cost you money.
Choosing the Appropriate Real Estate Investment
The most important thing here is to pick something that appeals to your personality, resources and risk appetite. Comprehend the peculiarities of what you are facing. Let’s face it, when it comes to investing in real estate, you are mainly interested in the return on your investment. The long-term positive effect from the property is what you are interested in here. How much income do you expect to earn from the property? How about the location? The property’s region dictates a lot of things, including the current rise in the value of the property after you buy. Since we are in a technology era, you don’t have to live in the area where you have property. You can buy and manage property that is miles away. Cities with a rising young population, rising property prices, and household growth is an appropriate place to begin. It would be best if you also considered the rental demand when picking a real estate investment property.
Types of Real Estate
The real estate industry is vast and continuously growing. Of course, with such growth, the market splits into different classes of assets; some investors will choose to settle on one niche while others might choose to spread out. Regardless of the real estate sector that you choose, there are several categories.
Residential Real Estate
These are properties such as houses, apartments, vacation properties, and many more where people pay to live. Once they choose to stay, that is going to sign a lease for their stay stipulating all the terms of the contract for the mentioned period. Common periods for rental agreements is twelve months.
Commercial Real Estate
These are areas like office buildings, primarily commercial spaces. Once you decide to divert your savings towards building commercial office space that you can later lease to small businesses and companies, you can earn rental income from the property. Most commercial rentals are for multi-year leases. With this, you are assured of greater stability in your cash flow. That is why commercial real estate is considered to be of higher income and stable potential than residential.
Industrial Real Estate Investment
Such properties include warehouses and much more that are leased to firms as distribution centers for a long-term leasing agreement. These are huge investments that possess a reliable revenue stream.
Retail Real Estate Investment
Common properties in this category are malls, shopping centers, and storefronts. In some circumstances, the lease gives the landlord the capability of earning a percentage from the store’s profit. If you have a multi-use property, you are in a better position of making more.
Mixed-use Real Estate Investment
This is a mixture of any of the different categories of real estate investment. This is great for those investors with significant investments as they offer a profound diversification that is integral at controlling risk.
Real Estate Investments
Real estate investments can be a suitable way of earning great income over time, which will offer you better security than other investments. Remember to start small as you increase your budget limit. This is a similar concept to micro investing. Once you are more comfortable, you can take up larger investment opportunities. Also, don’t forget to have an exit strategy from your real estate investments.
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