How to Make Money With Real Estate
We've all heard this vague explanation of someone's apparent wealth,
"Yeah, he made his money in real estate." This phrase is both intriguing
and irritating. It is intriguing because the term "real estate" sounds
like a magical gold mine where any one can just "make money."
At the
same time, it is irritating because people rarely ever elaborate on
exactly how one does make money in real estate. Well, here are a few
easy pointers to give you a basic idea of how someone "makes money in
real estate."
Raw Land Income
Raw land is a great investment because land almost always appreciates.
If you do not wish to improve the land in any way, you can still make
money. Purchasing land, especially during a good time in the market, is
one of the easiest ways to make money in real estate.
You can
essentially purchase land, leave it alone for a few years, resell it and
make money. Other ways to make money off of raw land include allowing
others to use the land by renting it from you. Land can be used for
agricultural purposes this way.
Residential Property Income
The most common way to make money in real estate is with residential
property income. Basically, individuals will purchase a property,
usually one that is at a reduced rate, improve that property and then
rent that property out to tenants. This is the most reliable way to make
real estate income.
Properties almost always appreciate, and your
property will begin making you money as soon as your first tenant moves
in. Things to consider with this option will be your responsibilities as
the land lord.
A land lord's responsibilities will include certain maintenance on the
property, insurance and taxes. You should also consider that a land lord
will, to some degree, be responsible for the tenant's actions.
If a
tenant causes damage to the property, you can evict them, but you will
still be responsible to repair the damage. Sometimes tenants can be
difficult to get along with. You should definitely remember that
creating income from rental properties is a job.
Commercial Property
A third option is commercial property income. Commercial property income
is generated by purchasing properties which would be used for business
purposes. These can include office spaces and other locations where
business is conducted. Commercial property can in some ways be less
stressful than residential as business owners will normally have higher
standards of how they will take care of the property, whereas
residential renters is more of a risk.
You are basically at the mercy of
that person's character. The stress of commercial property income will
come in the form of maintenance, taxes, insurance and the specific laws
in your city and state pertaining to commercial properties.
All of these options are viable ways to make money in real estate.
However, like with any other job there is no such thing as something for
nothing. All of these options will require hard work, research and
dedication.