We’ve all heard stories about moguls that have practically built their wealth on real estate. While this may seem like a fairy tale prospect, the truth is almost anyone with real estate knowledge and money to invest can grow their fortunes by investing in properties. Read on to find out about the different ways investing in real estate can save you money.
Long Term Residential Rentals
Investing in a residential rental property is one of the safest ways to make money. After all, people always need a place to live.
When looking for a property to buy, location is one of the most important things to consider. A property that is in a good location is likely to increase in value over time making these great investments.
In some situations, you may be able to purchase a property that’s already bringing in income for a very low down payment, or even no-down payment. These situations are rare but may occur if the current owner needs to unload the property quickly for personal reasons.
Another possible money-making opportunity occurs when you lease with the opportunity to buy. If the real estate is climbing, leasing your property is putting it at a pre-set price. That means, when you decide to buy it, you will be able to do at a price that is much lower than what it is worth.
You can make a profit if you decide to sell this property.
Flipping homes is a money-making opportunity that has grown in popularity due to the many renovation shows that are on TV. However, fixing up a property isn’t as easy as it seems.
The biggest challenge is understanding your after-repair value. Therefore, it’s a good idea to have a strong relationship with a general contractor. If you are friends with a contractor, he or she may agree to accompany you on an on-site tour of the property so you can determine how much your repairs will cost.
Once you have a good understanding of what your investment will be, you’ll be better able to determine how much you stand to make.
This is a process that can be achieved by finding a distressed seller and a ready to go buyer. Essentially it involves flipping the property contract from one owner to another. The investor acts as the intermediary between the sellers and buyers.
The process starts when the investor tries to find a distressed seller. Surprisingly, this isn’t too difficult to do. Delinquent mortgages are public knowledge they are available at local courthouses and through list providers. Investors may find a list of people to target sooner than they think.
Once the investor finds a seller, the two enter into a contract which basically states the terms of any deal that is made. If the investor is able to find a buyer who pays more than the seller is looking to get, he gets to keep the extra amount as a commission.
He also has the option of buying the property from the buyer at any point down the line.
Short sales occur when a homeowner is behind on his or her mortgage payments, but the property has not yet gone into foreclosure. During this time, the home may be sold off for less than what is owed on the property. This is a great way for a buyer to buy a home under market value.
However, short sales can also be tricky.
A price must be agreed upon and buyers must often buy the property in cash. They can also take a longer time than other types of sales.
But if you can buy a property below value and sell it quickly, it’s a great way to make a quick buck. It’s also preferable to an auction because you can inspect the house before you buy it.
Vacation rentals are another great way to make money. Owning a rental property can be especially lucrative if they are located in a vacation hot spot.
What’s more, you don’t actually have to own a property to earn money on a vacation rental. You can do this by networking with owners to oversee their properties making sure they stay rented and seeing to it that their renters have the best experiences possible.
Hard Money Lenders
Hard money lenders provide short term loans on properties to people who normally wouldn’t qualify for these loans. Turning into a hard money lender can be a great way to make money.
Of course, the biggest catch is that you will need to have the money to lend. But if you do, you can yield some high interest rates as is typical of short-term loans.
If you don’t have a lot of capital and want to become a hard money lender, you can lend smaller amounts of money and find investors to come on board. After a bit, you will find you will be able to play with the big boys.
Commercial Real Estate
Investing in commercial real estate is another way to increase your income. Similar to residential properties, investors can make money by flipping commercial buildings. They can buy them and make renovations and upgrades and sell them to entrepreneurs in need.
Real estate is a great way to generate income and, once you know what you’re doing, your investments can begin to work for themselves. So what do you think? Is real estate investing the career move for you?