Property Management Blog

How To Make Money in Real Estate

System - Monday, January 29, 2024
Property Management Blog

Investing in real estate has created wealth for many people. That’s why, a lot new investors are interested in entering into industry. However, some still hesitate thinking that you need to have a huge amount of capital or many assets before you can fully participate in this sector.

Most don’t know that you can join the benefits of the real estate industry at any time. You just need to be armed with a great strategy. No matter the duration of the investment you are choosing, the potential of wealth creation in real estate remains powerful compared to other types of investments. 

If you are feeling lost about what your first step should be, this article aims to help you get started to take advantage of the rewarding opportunities that come with engaging in real estate! Here are some tips to help you earn more from your real estate investments: 

Opt for Long-Term Rentals

A lot of investors earn money in the property industry by renting out units over a long period. Given that rental market demands often remain fairly steady, choosing to purchase rentals for long-term leasing is a great strategy. You just need to find a good location.

a white kitchen with dark wood flooring and a large table

You will know which market you can target by your choice of property location. The better the location, the more value it can provide for residents and income for property owners. Look for properties near transportation hubs, entertainment and work centres, and outdoor spaces as these are all important amenities prospective tenants look for.

Investing in a rental property is a traditional route and holding real estate for a long time generates a high return on investment between rental income and value appreciation. That said, managing and owning a rental space are two different things. Hiring a reliable property manager can reduce your landlord responsibilities as they’ll market vacant units, ensure that your property complies with state property laws, screen potential tenants, and collect the rent on your behalf.

Explore Leasing Options

To reduce risks from purchasing properties, you can decide to lease with the choice to purchase. This can be a smart move as property prices rise. You can also sell the rights to purchase to another interested party. The important thing is having the option to own the property at a later time.

Having an option in the lease contract creates opportunities for an investor to generate money through real estate. So keep an eye out for lease option arrangements which can be generally advantageous.

person using a pen to sign a lease agreement

Buy, Upgrade, and Sell Properties

Flipping properties can be lucrative but you need to be cautious and know what you are doing. If you choose the wrong property or overspend in renovations, it can result in a financial loss. It’s best to look for slightly run-down homes in a desirable neighborhood. This is because you have the opportunity to purchase a property at a low price and renovate it to add more value and attract new buyers. 

Once you’ve found some possible properties, you need to calculate the cost of the purchase and upgrades. Then compute the profit you will earn after the renovation project is completed. A good tip is to have solid ties with a contractor you can trust. Schedule a thorough property inspection before taking the plunge to avoid surprise repair projects that could eat into your budget.

Consider Flipping Contracts

Another effective money-making plan in real estate that won’t require too much initial capital is flipping contracts. You can be the middleman between a real estate buyer and a seller. Finding the two interested parties and negotiating a deal between them can help you earn a lot. However, you need to research and find property owners looking to sell off their units due and buyers wanting to purchase units in their preferred neighborhoods.

a landlord and tenant review a rental contract together

Take Advantage of Short Sales

If a property owner falls behind their mortgage payments, a short sale can happen, which means that foreclosure has not occurred yet but the property will be sold at a lesser price than the amount owed by the owner. In this situation, the lender and initial buyer end up with a loss but the new buyer can earn a profit. 

All parties must first mutually agree to all the terms and conditions of the sale. This option entails having a ready cash amount to purchase the property. You also need to know the benefits that the property brings even if you cannot arrange an inspection, which can be difficult for inexperienced property investors. The highlight of short sales is they have the potential to bring high returns for the investor. 

Invest in Vacation Rental Units

Owning a vacation rental can lead to earning a stable income, especially in places with high tourist traffic. Short-term rentals are always in demand in cities with plenty of local attractions. If you have fully satisfied vacationers, they can refer your property to others or become loyal, repeat short-term renters. 

A good way to succeed in this arena is by offering an outstanding experience for your renters. By providing value, you gain an edge over other competitors. You will also need to market constantly and even advertise through rental listing sites to gain more prospective short-term renters and earn consistent rental income.

Bottom Line

Any of the tips cited above can help you generate real estate income. The most important thing is to assess your budgets, determine your long-term goals, and plan carefully. If you need help managing your real estate investments, consider partnering with the experts at KRS Holdings. Contact us today to learn about our property management services!