If you’re looking for a way to make money, starting a real estate company could be a good option. Here are 5 ways you can make money with a property business.
Investing in real estate is a smart way to earn semi-passive income and create long-term wealth. In fact, 10% of the world’s richest people became billionaires through real estate.
Thinking about starting a real estate company yourself? Keep reading to discover the main ways that individuals are making money in real estate.
Make Money With Rental Property
If you don’t mind dealing with tenants, or are willing to hire a property manager, rental properties make great investments. Individuals and families always need somewhere to live and businesses need buildings. There are three main types of rentals to get involved in; residential, commercial, and vacation.
Residential Rental Property
Investors have rented out residential property to long-term tenants for hundreds of years. Nowadays, it’s a way to create a steady income stream that’s almost passive. Occasional maintenance and monthly management are still required so it’s not completely hands-off.
The big thing to remember when buying real estate to rent out is that the monthly expenses need to be lower than what the going rental rate is. This requires doing some investigative work ahead of time.
Check the neighborhood rental rates before deciding to invest in a particular piece of property. Compare that with what you’d pay for taxes, the loan payment, and insurance combined.
When it comes to residential rentals, consider buying a multi-unit property. Living in one unit and renting out the rest is a good way to get started with investing.
Most times, the rents collected will cover the entire mortgage. It’s almost like your renters are buying your home for you. You’ll also be on the premises to keep an eye on things.
Buying commercial properties and leasing space to businesses is a more stable investment option than residential rentals. Commercial leases lock tenants in for lengthy terms, guaranteeing an income source.
Another huge bonus related to commercial property investments are tax breaks such as the 1031 exchange and cost recovery program. You’ll want to research what’s available to you at sites like www.1031gateway.com.
Buying a commercial property that’s already leased out provides immediate income. Keep in mind that closing on these types of properties can take longer than residential purchases so plan accordingly.
If you have property in a popular tourist location, you’re bound to make a substantial income by renting it out. These short-term rentals need more upkeep but demand higher rental fees. For more exposure to vacationers, list your vacation rentals on sites such as:
Once you have some experience under your belt, other homeowners in the area may pay you a fee for handling their rentals as well.
Real Estate Investing
If you’d rather not get involved with rentals, there are still options for you; property flipping and REIT.
We’ve all seen the house flipping and renovation television shows. Thanks to these, the property flipping market has exploded. A lot of investors get started this way.
But, be cautious when you’re new or you could end up in the red. To figure out potential value after improvements, get a general contractor involved and tour the property.
Here are property flipping tips to help you out if you’re new to house flipping.
- For better property values, look for ugly homes in nice neighborhoods.
- Network with real estate agents to find the best deals first.
- Don’t take on renovation projects that are over your experience level.
- Be a creative real estate problem solver.
Finding the right house might take some time, especially in urban areas. Don’t settle for a mistake because of impatience.
Real Estate Investment Trust
Real estate investment trusts are like stocks. First, REITs are offered by way of IPOs. Those IPOs are then used to generate funds.
Finally, the funds get used for buying properties. The investors involved make money when the properties sell, get rented out, or leased. If you’re a new REIT investor, look for a publicly traded option since the non-traded kind is higher risk.
Final Thoughts on Starting a Real Estate Company
Starting a real estate company and investing in property is a sure way to generate an almost passive income. Whether it’s residential or commercial, it’s a proven investment that’s shown its stability for thousands of years.
You’ll make money from property value increases and rental income from tenants. If you don’t like the idea of dealing with tenants and maintaining your investment properties, you can always hire a property management company to do it for you. Remember, always perform your due diligence before investing.
For more ideas on successful careers, check out these tips!