If your investment portfolio isn't looking good, it might be the perfect time to diversify it with real estate. While it requires a lot of time, patience, commitment, and capital, real estate can be a very lucrative way of increasing your wealth. With the right strategy in place, you can bring more cash by investing in the real estate market.
If you think real estate can be a reliable investment option, keep reading this article to learn how to make money with it.
- Prepare Your Finances
Before you start making real estate investments, it's essential to get your finances in order. Typically, real estate can be expensive. And you can't get the most out of your potential returns if you don't have the initial capital to finance your real estate investments.
Keeping this factor in consideration, make sure you have some cash on hand for the purchase and, more importantly, for the repairs and upgrades that need to be addressed as soon as possible. Meaning, if you want to make money in real estate, you should initially have the funds to finance the investment and make it big in the long run.
- Establish Your Real Estate Team
Of course, investing in real estate is a huge decision. Unless you're an experienced real estate investor, you need the help of some people to increase your chances of success. In other words, you should build your real estate team that support your goals and objectives throughout the journey.
To get started, the first thing to do is figure out the kind of help you need to make more money. For example, if you're planning to invest in Vancouver and other nearby cities, you can ask help from a professional Vancouver realtor to know about the best investment opportunities and local real estate market.
Moreover, you can also hire a property manager who’ll handle the daily operations of your investments. And if you need someone who can help finance your investment, working with a trustworthy lender will prove to be an excellent idea.
- Determine Your Investment Strategy
Once you've got your finances in order and established your real estate team, the next thing to do is to determine the type of investment opportunity that suits your needs. However, just like other assets, each class of real estate assets comes with different risks and returns. Hence, it's best to get familiar with the five W's of investing in real estate to ensure everything runs smoothly.
On the other hand, to give you an idea which investment strategies can bring money to your pocket, below are the options you can choose from:
- Renting Out A Property – This is one of the most straightforward methods to make more money in real estate. All you need to do is purchase a property, make the necessary repairs and updates, and rent it to someone else. From there, check your bank account as income will come each month from the rental rates.
- Flipping Properties – Another way of earning money in real estate is through house flipping. This means that you purchase pieces of properties, renovate, and sell them at higher prices. As long as you devote your time to this strategy, you can still potentially earn a lot of money in the long run. Make sure you also have the right resources to maximize returns.
- Buy and Hold – This is also one of the effective methods of making money in real estate. When you buy and hold, you can purchase a multi-family home, live in one of the units, and rent the others out. Another way to perform this investment strategy is to buy a multi-family house and have all the units rented to generate more income. In doing so, you should work to devote yourself full-time or hire a manager for the collection of rents, handling of repairs, and many more.
- Short Sales – This usually occurs when the home's current owner is falling short with their mortgage payment, but the property isn't yet under foreclosure. However, short sales can only materialize if all parties have agreed that the house will be sold for less than the existing mortgage. With this kind of investment strategy, you can make a quick profit without undergoing lengthy and expensive renovations.
- Contract Flipping – If you're looking for a real estate investment without putting up much capital, contract flipping can be a good option. Just find a distressed seller and a willing homebuyer who can come together to agree to make a sale. When you bring the parties together, you don't need to search for a buyer to buy your property right away.
- Commercial Real Estate Investment – With more and more people needing space for business, investing in commercial real estate can also be a profitable way to make money. Although you need to spend a considerable amount of capital for developing them, you can still increase your income by leasing or selling them at higher rates. Also, as your commercial real estate investments grow, you can open up large scale buildings or build shopping malls for higher returns.
- Real Estate Funds – Aside from buying real properties, earning an income is to invest in real estate funds. These are collected together with other investors and placed in a managed fund. Under this fund, there are several companies that manage real estate properties. The good thing about these funds is that they usually appreciate in value and provide long-term income to investors like yourself.
- Real Estate Investment Trusts – They're similar to real estate funds, but the only difference is that a single company or trust manages them. Under this strategy, your investment will be used to purchase and manage several properties to generate profit. Also, real estate investment trusts are popular because you'll have a good income source, even if you don't purchase or handle properties yourself.
Considering the information mentioned above, it's clear that many investment opportunities can help you make money in real estate. If you want to make full benefit of your returns, educate yourself with each process and understand the risk involved in the process. That way, you’ll have a better chance of creating a significant income stream for a long time.
Hopefully, you find this article useful in your overall real estate investing journey.