Real estate is one of the most common investments. However, it is not easy to manage in that world, especially if you do not have a good knowledge of the market.
Real estate is an investment alternative that consists of buying a property such as a house, apartment, commercial premises or land, and then selling or renting it.
There are many other ways to earn money by investing in real estate:
- Fix and resell,
- long-term rentals,
- vacation rentals,
- short-term rentals,
- long-term investments,
- private loans with housing guarantee,
- your personal residence
All of these can all be considered ways of invest in real estate.
A large real estate investment offers a great return of money without much effort. Each way of investing in the real estate sector has a different level of risk, profitability and time commitment.
Some investments in real estate are more a full-time job than an investment, as is fixing and reselling, while some investments like have almost no work. Let’s look at the best ways to invest in real estate in no particular order, with the goal of making money.
Make money with long-term rental properties
Renting long-term properties is a way of investing in real estate. You can take a lot of cash in advance, but the returns are incredible if you buy well and you are patient. The return on investment can be higher than 20% if the tax benefits and salary equality are taken into account.
When you invest in real estate by renting for the long term, you should focus on the cash flow. The best way to obtain a large amount of cash flow is to buy properties below the market value, make repairs to increase the value and choose homes that provide high profitability in relation to the purchase price. It is not easy to find properties like that; but you have to look for them, because they are in the market.
Better focus on single-family rentals, because they give better results than multifamily rentals. However, in different areas of the country, multifamily properties may offer better returns. Part of the reasons why you can get better returns in single-family homes is that there are more of them. With more volume there is a better opportunity to find a much better business.
There is another way to invest in real estate with long-term rental; commercial premises. It is a type of investment that generates high cash flows and hardly give management work. On the other hand, commercial rental terms are usually much more extensive and it can take a long time to find a tenant.
There are many types of leases: some leases consist of the tenant paying everything, including repairs and maintenance. Other leases imply that the owner must pay for almost everything, including the conversion / remodeling of the property to the needs of the tenants.
Make money with reforming and reselling
“Reform and resell” is a great way to invest in real estate, but a lot of work is needed:
- You have to find offers,
- manage the contractors,
- keep track of the accounts,
- and get to sell the houses.
It also requires a lot of money for the down payment and repairs, although a hard currency may be an option to reduce the money needed.
We advise this type of investment for people / companies with a large range of industrialists, and the ability to manage and lead projects.
How to invest in real estate by making a ‘pass’
Making a ‘pass’ in real estate is when an investor buys a property under a booking or deposit contract. Immediately the house is sold to another investor without making any repairs and in some cases without having signed the purchase-sale of the property.
An investor can sell the property without buying it, buy it by getting the contract and then assign the contract to another investor. Some real estate investors are engaged in making ‘passes’ and making hundreds of thousands of dollars a month. The advantage of ‘passes’ is quick money, but it is extremely risky and fundamentally occurs in the bull market where prices increase month after month.
Make money with your personal residence
Your personal residence is another way to invest in the real estate sector. Some may not consider a personal residence as a way to invest in real estate, as it does not bring rent. We believe that there are definitely ways to make your personal residence a great investment.
It is also possible to buy a personal residence that can be converted into a profitable property. This is a great way to buy a rental property with little money. You can buy more than one property in this way and build a rental portfolio with small down payments.
Invest in real estate with long distance properties
Investors are beginning to invest in real estate by investing hundreds of kilometers away. It takes a lot of work to make the long-distance investment work. You need to choose a market, find a great real estate agent, find a great property manager and then find the right property or properties.
- Choose a place: It is smart to spend time getting to know people and exploring any area in which you want to invest.
- Find a great real estate agent: A good real estate agent is a key to any successful investor strategy. If you want to invest in real estate over long distance, you need an impressive agent. That agent will help you find deals, possibly inspect homes for you and schedule inspections. I always suggest that the investor become an agent himself if possible, but it is difficult to do this with a long-distance investment.
- Find a property manager: If you want to invest in long-distance rental properties, you need a property manager. A good property manager can mean the difference between a profitable rental and a disaster. A property manager will rent the house, will manage the expenses, find contractors and take care of the house for you.
- Find a great contractor: It can be difficult to find a good contractor in your local area, and it is even more difficult over long distances. This is where you need a great real estate agent and the property manager to help you find a good contractor. The best way to find a contractor is by references. You need to have people you can trust in the area you are investing to refer contractors.
Make money investing in vacation rentals
Buy a house in an excellent tourist location, get a great property manager to rent it for you and charge the rent. The difficult part of a vacation rental is the very cyclical market. The high season can bring a lot of money, while the low season can bring almost nothing, because the demand decreases.
Cash flow on vacation rentals may look better at first, but management fees, expenses and vacancies will almost always be much higher in a vacation rental, than in a long-term rental.
There are many ways to earn money by investing in real estate.
The long-term rental is a good choice, because it continues to provide cash flow month after month, year after year.
“Reform and resell” can provide great income, but you must maintain a high volume of offers and quickly transform to make a lot of money.
The vacation rentals, long – range investment can also be great investments if you do your research, take your time and shop well.
This article was contributed by Zoom Property