The Real Estate market is one of the booming industries not in the country but also in the world. It is worth noting that before joining the market, it is important to know the market. There are some important things to consider when starting a Real Estate Business and that includes the different ways to make money from it.
Here are the different methods to profit in Real Estate:
1. Raw Land Investing
It is an act of buying a plot of land and improving it to increase its value. The raw land can also be subdivided in different parts which can be sold to interested parties.
2. Residential Rentals
You can also utilize and buy and hold strategy and build homes on the purchased land and start a residential rental business. But before starting this kind of business, you should first understand the importance of location and its distance to the key areas of the city. The more attractive the location the better, for this will increase the need of someone to rent a home in your place that will result in an increase in profit.
The tenant will be given an opportunity to acquire the house at a later time. Rent to Own is basically buying a house in an installment plan. There are two types of rent-to-own contracts that you should be aware of, one of them is lease-option and second is lease-purchase. In lease-option, the occupant can choose on buying the house or rejecting the offer after the lease ends. Lease-purchase on the other hand, the tenant is obligated to buy the property after the leasing period. Some contracts depending on the lessor, a percentage of the purchase price is included on the rent.
4. For Sale By Owners
If the person can’t afford or doesn’t want to avail a listing agent and wants to sell the property themselves, it is called For Sale by Owner. Homeowners can be the ones to sell their own property especially if they know every corner of it. They are also familiar with the neighborhood and the proximity of the house to nearby establishments and landmarks such as offices, schools, malls, restaurants, and access to public transportation.
5. Flipping Homes
A house flipper is using a buy-fix-sell strategy. It is when a person bought a property below market price, renovated and fixed the damages, and beautified the bought house that it will increase its value from its original price. Before flipping homes, you should first audit your budget for renovations and calculate how much is the target selling price after all the fixes are done. It is important that you should not spend so much on renovations.
6. Real Estate Wholesaling
Real Estate Wholesaling is the act of getting a contract with a motivated seller that would be valuable for an investor who is willing to pay for the property. The wholesaler is responsible for the paperwork, writing for the contract, and acting as an intermediary for the property owner while receiving a wholesale fee after the transaction to an interested party.
7. Contract Flipping
Contract Flipping is joining a motivated seller and a ready-to-go buyer together. When the two parties came to an understanding and already accepted the terms and requirements, you as a contract flipper can have a profit from starting the transaction in the first place.
8. Turn-Key Investing
The investor can purchase a house and transform it into a turn-key property. Turn-key properties are houses which are already rehabbed and ready for occupancy. Property investors can expect a steady stream of revenue from the rental fees that they are receiving from their tenants.
9. Single-family rental
It is investing in a move-in ready home to a single tenant. Single-family rental investments are also an advantage because it is easy to acquire, sell, and finance. There is also a huge demand for single-family homes that attracts first-time investors.
10. House Hacking
House hacking is renting a room from your house and making a steady revenue from it. This is more profitable if your house is situated in a prime location and surrounded by key establishments, landmarks, and hangout sites. It is also not just renting a room, for instance you can also rent your garage during the weekends for an increase in profit.
11. Development Investing
You can make a profit on a Real Estate property that is being built in your city. Development investing is buying pre-order slots in condominiums or subdivisions that are still under construction. After the construction, the investors can choose to rent the property that they bought or sell it at a higher price.
12. Short Sales
Short Sale occurs when the homeowner wants to get out of the mortgage and sell their house below the market price. Buyers can take advantage of this situation and acquire these properties and sell them at a higher price later.
13. Commercial Property Investment
Commercial Real Estate is a huge market. Commercial properties have so many possibilities, ranging from coworker spaces and office buildings, to hospitals and luxurious hotels which makes it ripe for investment. As a property investor you can earn money through leasing your tenants, the amount will be based on the dimensions of the property they’re currently occupying, and you can get your returns monthly or annually. As the owner of the commercial property you are responsible for the maintenance, pest control, sanitation, and so much more to make sure the companies and businesses that are residing in your building are comfortable in operating their business.
14. Vacation Home Rentals
Vacation Rental Business is a short-term investment but the returns are if the property stands in a highly-trafficked locale or a tourist attraction. Families, friends, or even newlyweds can grasp the opportunity to relax and unwind far from the distractions of city life.
15. Real Estate Investment Trusts
Real Estate Investment Trusts (REITs) are companies that own real estate properties or financing profit generating projects across different sectors. There is a huge benefit in investing in REITs because the process is easy and the returns are phenomenal depending on the standing of the real estate market in the country and economy in its totality.
These are one of the ways you can make a profit in the real estate business. It is important to expand your knowledge about the market and the method you wish to implement before investing your hard-earned money. Consult professionals if ever you need some clarifications. Real Estate is a fun market to immerse with, but nothing beats practical thinking and logic to double your money in no time.