Do you want to make it in real estate? If so, then you have come to the right place. Here you can find out everything you need to know about the options that you have as well as finding out what you can do to try and make things work in your favor.
Increasing Property Value
The best way for you to make money from real estate would be for you to make money from appreciating value. You can increase your return on investment in a number of ways. One way is, if you have had to borrow money to pay for the property, you can then refinance the loan at a much lower interest rate. This is great if you want to lower your general cost basis for the property and the amount that you will clear from it. The most obvious source when it comes to appreciation is of course, for you to develop, undeveloped land. Cities expand with time and when they do, the land outside will become even more valuable. A lot of this comes down to the potential for other developers to generate an interest. If you have a developer build a house or even a commercial building, then this will raise the value even more. Appreciation in land can come from the discovery of valuable minerals or various other commodities. This is provided of course, that the person has the rights to them when the name transfers. If you were to look at another extreme example of this, then it would be if you struck oil. Appreciation can also come from natural resources such as gravel or even trees.
Role of Inflation
Inflation has a huge role to play when it comes to your property in general. When you look at appreciation, it is vitally important that you take into account inflation too. An annual inflation rate of around 10% means your dollar will only buy around 90% of the goods the year after. This applies to property too. If you have land that was worth around $100,000 in the year 1970 and it happened to sit dormant and undeveloped, then it could be worth way more in this day and age. Inflation alone can lead to a huge increase in your real estate, and it can also give you a small victory when it comes to profit. The great thing about this is that you don’t have to do much either.
Real Estate Income
Another way for you to generate a lot of wealth would be for you to make sure that you provide a lot of regular payments as income. This could be from rent, but it can be income from other real estate too. As you can imagine this can come in many forms, so it is vital that you think about this as much as possible.
Raw Land Income
Of course, depending on your general rights to the land, it may be that a company is able to give you royalties for a discovery that you have made. This could be any structures that they have added as well. Pump jacks, gravel pits, access roads and even cell towers all should be considered here. Raw land can easily be rented out for production and on top of this, land tracts with trees could well be valuable for timber. This can be harvested on a regular basis which makes things even more interesting overall if you have an open area of land.
Most residential property income will come in the form of very basic rent. With this, your tenants will pay you a set amount every month and this will of course, go up with demand and inflation. You can take your costs out of it and you can then claim the remaining portion as being your rental income. Of course, a desirable location is so important if you want to be able to secure your tenants easily so try and be mindful of this if you can.
Commercial properties can easily produce income from a lot of aforementioned sources. Basic rent might well be the most common, but it is possible for you to add more when you look at option income too. A lot of commercial tenants would be happy to pay a fee for any contractual obligations. This could include the right of first refusal when it comes to the office that is next door for example. Tenants will pay a premium to have options like this and it may be that they never even exercise them.
Buy and Hold
If you want a very traditional way to earn an income from your real estate, then you should know that there are a huge number of ways that you can try and do this. It is possible for you to buy a home and rent it out or you can buy a multiple family property, live in one of the units and then rent out the rest. You ideally need to make enough to pay the mortgage and your own housing expenses. If you can make a profit on top of this, then of course, this is great. Just make sure that you hire chartered building surveyors & valuers so you can make sure that the property is the right investment for you.
Next up, you have flipping. Those who flip properties for a business income tend to specialize in adding a high-return fix to a house within a short period of time. They then flip them. The great thing about flipping is that it can be very lucrative, and this is especially the case if you know how to find properties that you need to fix up. If you can do the renovations yourself or if you have a crew who you know you can trust to carry them out, then this is even better. You may find that you can rocket the potential value even more, and this can work in your favor.