In stock investment, returns aren’t guaranteed. You can lose more money than you’ve invested because of the unpredictability of stock prices in the market. Thus, searching for another investment portfolio might be an option for you. And compared to bonds and equities, real estate is less volatile due to its infrequent market transactions and appraisals. True, this investment is expensive, but it can yield higher and more stable returns in the future. Real estate appreciates its value over time, even if the properties are dormant. In fact, real estate investment can provide multiple streams of income. So, how can one make money from real estate?
If you don’t have sufficient funds to pay for mortgage, setting up a rental business may be more feasible. In this scenario, your lessee or tenant pays the mortgage through his or her monthly rental payments. You may not be earning any profit at first, but with a fixed mortgage, your rental income will increase due to inflation and demand in the market. Over time, you’ll be reaping the benefits while acquiring ownership to a property through others’ pockets.
A piece of raw land can be rented for livestock or agricultural activities. The government can also lease property for the construction of pipelines, access roads, cell towers, and other structures. If you have cash to spare, you can build a residential or commercial space with smaller partitions which then can be leased to families or business proprietors.
Sale and Use of Leverage
Acquiring a property and offering it with a higher selling price can provide tremendous earnings. Use leverage when purchasing a property; instead of spending your entire money on a single property, acquire various parcels and facilities. Also, choose a location where business is expanding because that is an opportunity for better market value in the future.
You can purchase a few acres of barren land and implement some improvements. Any improvement can raise the equity of the property. Flipping of houses is an effective strategy — you can select an undervalued home and then renovate it. Of course, you need to ensure that the value of improvement would be higher than the costs incurred.
Selling your own property can be tedious. It is difficult to determine whether the buyer is financially capable of acquiring an asset. If you don’t want to venture into an investment but you have outstanding negotiation skills, you can be an agent to a real estate transaction. As a broker, you act as a representative of the seller while earning a sales commission. In prospecting clients, you can enhance your connections by engaging them in conversation, joining in social gatherings, and volunteering in community services. If you have the expertise, clients will visit you for advice. As an advantage, take the licensure exam to be a licensed broker. After obtaining your license, establish your own brokerage firm and realize higher commissions from your pool.
Aside from those mentioned above, there are other techniques to earn money from real estate such as Real Estate Investment Trusts (REIT), refinancing, exploring of mineral deposits, etc. It is necessary that you consider your resources, skills, and interests in choosing the right method so that you can successfully win profits from real estate.