There are two ways to generate an income through real estate. You can make a passive income by buying and holding, or you make an active income by flipping contracts, doing renovations, or adding value. This might seem overwhelming at first, but with experience, it becomes less intimidating.
Here are some proven ways to make money through real estate.
Long-Term Residential Rentals
One of the most common ways to make money from real estate is to use long-term buy-and-hold residential rentals. People will always need somewhere to live, and that means there’s a need for rental properties.
Do your research first and find a property keeping the most important principle of buying a property in mind: location, location, location.
The location is important.
It will help your asset to increase value over time and will help you to find a tenant more quickly to rent your property on a long-term basis. If you’re considering long-term residential rentals, you need a great location. This matters more than the current state of the property.
A run-down home in a great area can be one of the best property investments you can make, as experts like Paul Ognibene of Cohasset know.
Lease Options
Lease options can be a good way to get involved in real estate without having to put up a large amount of capital or have great credit. Lease with an option to buy. This works well when the real estate market is climbing, as you’re creating a pre-set price to purchase the property for later on.
If the property market climbs by a lot, you can buy the property at a discount.
You could also choose to sell your rights for that purchase to somebody else. As long as this is an option you can make use of and not set in stone, you could turn a healthy profit.
Home Renovation Flips
Thanks to the popularity of home renovation shows the renovation flip market is booming. A certain amount of money can be made, but it can be tricky. If you lack the knowledge or the experience, you could lose money if you don’t buy the right property.
Go for the worse home in the best area. This is where real value can be found. It can be hard to find these homes if you don’t have a network of real estate agents, and to understand the after-repair value.
What will the home be worth once you have invested in fixes and repairs? You’ll need a strong relationship with a contractor, who can help you work this out with a tour of the property.
It might be tempting to buy sight-unseen at auction, but if you don’t what you’re doing, this is a big risk. It can be straightforward to make money on a home-renovation flip, as long as you understand the underlying costs and potential value.
Don’t try to bite off more than you can chew, and look for creative ways to solve problems and crunch the numbers.