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PROVEN WAYS OF MAKING MONEY IN REAL ESTATE

Posted by Remilekun Lilian Durodola on February 16, 2021
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Real estate is evidently one guaranteed way of making and you can go as far as building wealth, depending on how much effort you’re willing to put in and your goal as an investor.

There several proven ways of making money in real estate. Some of the most common ones are:

  • Rental income: the money you get from your tenants as rent doesn’t just become your entire income. It covers all necessary costs, which includes: tax/land use charge, insurance, utility costs, management (agent fees) unless if the property is being self-managed, maintenance costs and other unpredictable expenses. After you must have covered all these costs, the left over is what you take as your income. Religiously carrying out this maintenance culture, will not only increase rental yield, but also increase the value of the property when the landlord decides to put it up for sale.
  • Flipping: this is a short-term play. It involves buying a property, refurbish it (which adds value) and then sell. Adding value can be in a number of ways. There might be internal refurbishment or build an extension to the already existed structure. Purchasing a property and selling it after making improvements and changes, both small and large, is a common way of making money in the industry.
  • Buy-Refurbish-Rent: the third way of making money in this game is by combining rental income and the principle of adding value by refurbishing, together. So, you flip the property, but hold on to it and rent it out.
  • Real Estate Investment Trusts (REITs): a REITs is another way of investing into properties without getting directly involved in the day-to-day activities of real estate. Typically, the investor will invest in a company or fund and the company or fund gets a percentage of whatever income comes in through the property. This is not yet a common practice.
  • Property crowdfunding: as the name ‘crowdfunding’ implies, and investor joins other like-minded people. They raise money together to acquire or fund a project. Property crowdfunding does not only occur for purchase of property, it can also be for refurbishment, a flip or an entirely new development.

All of these options and many more are ways to invest and make money in real estate. But, the goal of the investor will determine the best option to go for.

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