How to Make Money from Real Estate Investment

There is no shortcut in this world that will make you rich overnight. One has to put all the efforts to achieve the target and get successful and same is the case with Real Estate. Slowly and steadily one can build wealth by investing in Real Estate. Of Course just like any other business real estate also has some risks associated with it but once you educate yourself about the best ways to get returns from real estate investments, it will be a great source of wealth creation.

So, what do you understand by Real Estate investment?

Real estate investing is the purchase, ownership, management, rental or sale of property for profit.

What are the ways you can make money in Real Estate investment ?

Generally we have two primary ways to make money from Real Estate

  1. Appreciation in the value of a property over a period of time.
  2. Rental income collected in case of a rental property.

But here we shall be discussing all the other known ways as well to make money in the Real Estate investment.

1. Appreciation in the value of Real Estate

Increase in the value is known as appreciation, so whenever there is a significant increase in the value of Real Estate, you have the opportunity to sell and make profit out of that. This will not happen every time but you really have to grab the opportunity whenever you get a chance to do so.

2. Making money through Rental Properties

Nearly 30% indians live in a Rented Property and only 50% of indian population is living in their own houses. Rental property is one of the primary ways to make money in Real Estate.

You can build a residential property and then rent it out or you can build offices and then give it on lease or rent or you can also buy a distressed property and renovate them and then give them on rent. There are a number of ways you can make money through  rental properties.

The best part of rental properties is that it will generate you regular cash flows and if you choose your tenants wisely then you will have this regular income for a long period of time without doing much.

But the downside of Rental Properties is that if you have any kind of issues with the property then it is not going to benefit you much and rather it will always be a headache to you. So it is always recommended if you go with rental properties as an investment option then you have to choose the property wisely, be it the location or the condition of the property or the connectivity. But once you have a bunch of rental properties, it will give you enough income.

3. Flipping Real Estate

Another great way to make money in Real Estate but this is very risky at the same time. Flipping Real Estate is simply buying a property, renovating it and then selling it at the higher prices. Now in this type of investment you really have to be very experienced in the real estate market because if you make any mistakes predicting the correct price of the property or the repairs and maintenance required or the best price you can sell this property later on, then you may be facing losses. So go for the type of investment option only if you are confident and experienced enough in the market.

4. Interest Through Mortgage Notes

What is a mortgage? Mortgage is a loan specifically financing Real Estate as simple as that. And what is a mortgage Note? A mortgage note is a written agreement in which one party promises to pay a certain amount of money to another party within a certain period of time. The bank and borrower agree to these notes and when a borrower takes the loan these mortgage notes legally bind them to repay the loan.

So when you buy a mortgage note you have your monthly payments in the form of interest as well as principal amount. This is just like the steady income from the rental property but here you don’t have to get involved in the property in any form and as the loan duration is clearly mentioned in the Mortgage Note you know exactly how long will be receiving the payments. This is a very easy way to invest in real estate throughout the country since you don’t have to deal with any of the local rules and regulations regarding real estate licencing or taxes etc.

5.Real Estate ETFs And Mutual Funds

Now if you don’t have a lot of money to invest upfront and you don’t want to get involved into those complex processes of investing in real estate then exchange traded funds and mutual funds are one of the best options to invest in real estate. You can invest in those mutual funds or ETFs which themselves invests in real estate. The best part of investing in mutual funds and EFTs is high liquidity plus some other advantages like tax benefits and the opportunity to start investing even with a low budget.

6. Private Lending

Private lending is an Individual or a small business providing financing to the other investors using his own funds. This is an alternative to the traditional ways for financing an investment mostly used in flipping real estate strategy, where hard money lenders loan money to those using the fix and flip strategy. But we need to keep in mind that these kinds of loans are of very high risk.

7.Lease With an Option To Buy

When you lease with an option to buy and the prices of the real estate share market are increasing, you have an option to buy the property at a lower price at a later stage or you can even sell your purchase rights and make profits.

There are a number of ways one can invest in the Real Estate Market, you just need to understand which one suits you best and what way you can make the best profits.

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