Here’s a guest post on 3 ways to invest in real estate from Adriana who blogs over at Money Journey Today. If you’re looking to build serious wealth then real estate definitely has a role to play. I’ve been in the real estate market for nearly 15 years now and have had experiences renting out a room in my home and with rental properties. While investing in real estate can be tricky, in my experience it has been a fairly good investment. Even when I consider my experience with rental properties, I still managed to make a decent return with the appreciation of the properties. Anyway I can go on forever about this topic, so without further ado, here is Adriana’s post:
Investing in real estate has been a successful business model for many decades.
While many believe the risks and financial dangers are too much to handle, others continue buying real estate with a clear goal in mind: building wealth.
Purchasing a house or apartment is clearly a time consuming and expensive process.
However, if the opportunity presents itself, buying real estate can turn out to be a profitable investment!
Here are 3 ways you could build wealth with real estate.
1. Owner occupied rental property
If you’re blown away by the fancy term, know that owner occupancy is just another way to describe home ownership.
Extravagant words aside, one of the easiest ways to start earning with real estate is by renting out your own home. The one you already live in!
By definition, an owner occupant is the property owner and also a resident who has the right to rent out unused space.
For instance, if your home has a floor or basement (preferably with with a separate entrance), renting the space would be a great way to start earning money on a monthly basis.
Growing up, I’ve had the opportunity to see owner occupied renting ‘in action’. Many people living in the close proximity of certain universities in my home town would rent out their free space to students.
Students were happy to have found an affordable place to live, close to campus. Owners were happy to have found someone who pays rent and will only be around few months!
If the ‘chemistry’ was right, the student would return next semester. If problems occurred, there were plenty other students or home owners to contact and “rent fresh”.
The best part about owner occupancy renting is avoiding second mortgage loans. Since you already live there, you’re renting out space you already own.
Renting out space you already paid or are currently paying for, also comes with minimal investment. You’ll have to make sure the space you’re renting to your tenant is comfortable, clean and well maintained. And this comes easy, since you live there as well!
In addition, some mortgage lenders will charge lower rates for owner occupied homes. So if you’re looking to buy a house but could use some additional financial help paying off the mortgage, this could be a great way to earn some extra cash.
The downside, however, is sharing your home with someone else. This isn’t an arrangement many are willing to handle, since it can be perceived as uncomfortable.
2. Renting through AirBnb
… or other companies that allow you to rent your home short term.
Renting out your property to tourists is a great way to start building wealth!
Millions of tourists visit myriad locations every single year, all year round. If you play your cards right, renting your home short term can turn out to be a profitable idea.
Many tourists prefer renting a house or even small apartment when on vacation. Hotels are usually more expensive and less flexible. Renting out a space where you can come and go as you please, experience the city as a local does and not worry about someone else cooking your meals is actually appealing to many!
Over the last few years, I’ve stayed in few AirBnb properties and have only given great reviews. Some owners had a second house they listed as a rental property, others rented their own home while they themselves were away on business or vacation.
The upside with renting your house short term is the ability to earn good money and potentially build a real business! Many owners (who have been renting their homes to tourists for years) have repeat clients who won’t even consider looking for other properties to rent!
The downside though, is being stuck with less than civilized short term tenants. It’s a risk many have to take when listing their properties as available for tourists.
3. Fix and flip
Flipping houses has been a popular business model for years!
Although many only get to see it on TV, others choose to jump head first and give house flipping a try.
Theoretically, investing in an under-market-value property and selling it for profit sounds simple. Truth be told though, upgrading a rundown house takes time and money. Not to mention knowledge.
Despite the efforts involved, however, it might be worth giving house flipping a try. It’s a great way to invest in real estate and start earning serious money.
The trick to flip houses ‘the right way’ is knowing which home improvements increase property value the most.
The next thing to always have in mind is your target buyer. Once you know which home improvements are best to focus on, it’s time to target the right market and make the repairs accordingly. With minimal investment, of course, if possible.
When your new and improved home is ready to be sold, doing some research will help a great deal when putting a price on your property. A competitive price will help sell the property faster, so you can move on to your next real estate project!
Alternatively, you could actually rent the property and become a landlord. It’s something to consider, if you feel selling the house won’t be as profitable as you initially hoped.
The Take Away
Investing in real estate, as you can imagine, isn’t all rainbows and unicorns.
It takes time to build wealth and often, it takes a serious initial investment to start seeing results.
Nevertheless, if you play your cards right, investing in real estate to build wealth is definitely worth it.
Thanks for reading 3 ways to invest in real estate.
Adriana is an experienced web content writer, passionate about everything personal finance. She blogs about the topic over at moneyjourneytoday.com, where she covers everything from saving money and frugal living tips, to real estate and investing.