The initial investment will be on the higher side, and every decision will require a lot of attention to detail. But on the whole, property investments do yield good returns in the long run.
In this article, we share 7 ways you can make money through real estate investments. Each of them have their own risk factors, and a varying time commitment. Some of them might even require more effort from your part. But they are all tried and tested methods to make money by investing in property.
1. Capital Appreciation
Capital appreciation is the increase in the value of a property of a time. The property you purchase now as an investment will become more valuable in the years to come.
The money you make through capital appreciation will vary depending on economic factors, and the amount of time that has passed between the purchase and the sale of the property. To get a good income through capital appreciation, it is best to buy a property and then wait several years before selling it off at a good profit.
2. Monthly Rentals
You can let out the property you’ve purchased to a tenant who will be paying you on a monthly basis. You can also earn a bank interest from the rental deposit collected from the tenants.
A short-term rental agreement minimizes the risk, and also allows you to increase the rent by a fixed percentage once the term is over. You will have to spend a bit to maintain the property, but otherwise renting out your property is an easy way to make money on your real estate investment.
3. Property Leasing
Another way you can make money from the property you’ve purchased, is by letting it out for a long term lease. These leases are usually contracts made for a few years at a time, so you don’t have to hunt for new tenants every other year.
The lease contract can be framed with specific details including, tenure of the lease, who will be responsible for the maintenance of the property, terms on which the lease can be terminated, etc.
4. Buying Discounted Property
There are some great property deals out there. We just have to keep an eye out for them. People who are unable to pay off their loans, families who want to sell their ancestral property, and those who maybe migrating abroad are usually willing to settle for a lower price so they can complete the deal fast.
If you’re able to get your hands on a discounted property, there’s nothing like it. You’ll get to purchase the property for a much lesser value than it’s worth. And then you can sell it off at market value (or more), making a tidy sum in the bargain.
5. Buying Property in Bulk
Many real estate magnates offer deals on bulk purchases of property. You might be able to get a large area of land for a great price, which you can then divide and sell as individual plots. You can do the same with a building as well – buy an entire complex, and resell the individual units at a profit.
This type of investment might require a bit of paperwork, and a bit of hunting to get the right buyers. But with the right people behind you, you can earn a good return on your initial investment.
6. Buying Run Down Property
There are a lot of old properties that have been abandoned or neglected. You can purchase a run down property at a low price, fix it up and then resell it at a higher rate. You will have to thoroughly inspect the property to ensure that it can be repaired and resold at a later date.
There will be a cost involved in renovating the property, but if the property is priced right, you can make up the expenses and still earn a profit when the property is resold.
7. Buying Distressed Property
A distressed property is one that is put up for sale by a financial institution because the owner isn’t able to keep up with the loan payments. If you are able to find a distressed property within your budget, you can buy it from the bank or financial institution at a good rate.
After you buy the distressed property, you can make money by letting it out for rent immediately, or wait a few years and put it up for sale at a higher price.
As you can see, some of these investments will be akin to a full-time job, requiring more effort from your part. But most of them just require you to be business savvy and make the right decisions at the right time. We hope the points outlined in this article give you the information you require to start making money by investing in real estate.
Another good investment that can pay off in the long run is buying land with trees which are useful as timber. This is more of a long term investment but something that is bound to give you great returns.