No doubt, real estate investing is a tried and true way of making money. What’s more, across the country now, home values are on the rise.
The easiest way to earn money from real estate is to purchase it and hold onto it long term. That’s because real estate generally grows in value over time. However, for those who wish to earn money at a faster rate, there are several key ways to do so. Each one comes with some risks, and each one should be considered based on the investor’s goals. Take a closer look at some key ways to build wealth from real estate investing.
#1: Buy and Flip a Home
House flipping, as it is often called, is not as simple as it seems from reality TV. However, it is a proven method for making a profit from homes if you’ve done the research on how to buy properties at an affordable rate.
The goal here is to buy the home at a lower price point then add value to the property. The trick then is selling your home in a short period of time to minimize your overall expenses.
Flipping homes like this is best done by individuals who can handle at least some of the home improvement work themselves. Alternatively, the buyer could partner with a contractor. Additionally, it takes a good eye for spotting properties in the most desirable areas.
#2: Buy and Rent a Home
As noted, real estate value generally increases over time. This is true even if you don’t do much to it. What’s more, in some areas that value grows faster than it does in others. In the meantime, owning and renting out the property can create an income stream for the owner.
However, there are a few key things to keep in mind here. First, you need to buy real estate that’s in a desirable area. Next, you should make sure it’s a good rental property. Think about who is most likely to rent the space and the amenities it can offer to them.
This means also spending a good amount of time managing the property, responding to tenants, and taking care of your overall investment. Yet, it does create a solid stream of income over the long term.
#3. Invest in Commercial Space
Though retail space tends to be one of the most challenging of all types of commercial real estate to own, office buildings and restaurant space are growing fields. For those who are looking to move away from residential real estate, being able to purchase and lease commercial space can create an excellent and lucrative opportunity.
The key is to know the market well. Knowing how well the market is saturated can help you determine if the investment is worthwhile. You also need to decide carefully on purchases. That’s because commercial real estate tends to require frequent updates and modernizations to keep it attractive to tenants. Property management firms can help manage some of the day-to-day management needs of such spaces.
Which Real Estate Investing Plan Is Best for You?
Which of these methods is best for you? Consider the amount of money you wish to put into the process of buying a property. Then, consider the overall demand within your area. In areas where there is a housing shortage, for example, rental properties are highly desirable. In an up-and-coming urban area that’s attracting millennials, owning and managing commercial or multi-family properties can be ideal. For others, flipping is the fastest way to earn a profit if you can manage the work and time that go into this challenging process.