How people make money from real estate investment

Making money from real estate investment is extremely common nowadays. Since the boom of the real estate industry, there has been a rush to invest here, thereby increasing its worth. When I decided to start investing my money, even I decided to opt for real estate as my area of investment. But before that, I had to know how money was earned through real estate. Knowing that is very important, as otherwise you will not be able to make optimum use of the invested property. So I gathered some basic knowledge and went ahead to make the investment. Here I have enumerated the basic ways in which money in earned via real estate investments.

Getting money from rentals

This is by far the most common way of utilizing a real estate property. Here, all you have to do is buy the property, and refurbish it properly. Thereafter, you can rent it out to tenants. This is also the simplest way to earn money with real estate. Your real estate investment would include the house and the maintenance charges you would have to incur. Apart from that, there is hardly anything else to worry about. The tenants will give the rental monthly and you would be earning a steady income that way. Here, how much you charge the tenants will decide how much returns you earn on your investment.

Making money when property value increases

This is a comparatively long term real estate investment scenario, where there are many factors playing in your prospects of earning a good money. The main idea here is, you buy the property for a particular value, and then when the value increases, you sell it off to earn the increased value as profit. The problem here is that property value may not always increase that much. So, you would have to be really prudent about the time you are investing in such property, and also have patience to see through, how much increase is taking place and wait if it is not profitable enough. A real estate agent was really helpful here, as I decided to go for this option. The agent helped me identify the areas which had the most potential to grow and hence the real estate there had most potential to increase in value. Making in investment in such areas is usually low risk and more profitable. So, make an investment as per your needs.




Basic steps of real estate investment

Deciding to make a real estate investment is probably one of the best decisions you can ever make. I sincerely believe that investing in real estate has proven to be an extremely sound financial as well as personal decision for me. In the present times, real estate is indeed the hot market where more and more people are investing. It is no wonder they are, considering the high benefits of this particular kind of investment. Apart from high capitals gains, a secure saving plan and amazing tax deductions, real estate is overall a very tangible and assured form of investment. The cash flow makes the investment worth it. I have listed here the basic steps I followed on my way to making an investment in real estate.

Research the market well

When I decided to go for real estate investment, I had little to no idea about what this investment market is about and how it functions. Instead of simply deciding to buy any property, it is a better decision to find out more about the investment type, and know which areas are more profitable. There are different neighbourhoods with different price structures. Unless you do a research and find out, you would not be able to compare prices and find out which suits you better. Some properties need little work or effort as an investment, and some require a lot. So, a research is what can make you aware of these distinctions. Take the help of a good real estate agent to help you through this step effectively.

Get financially set and buy the property

Once you are done researching and are fairly sure of what you want and how much it will cost, it is time to buy the property. Set your financial status in line and get rid of any debts you might have. Set aside a fixed budget for the house and make sure you have plenty extra money too, as there will be unforeseen expenses. Make a low down payment to the seller, and buy the house. The sooner you get the ownership of the property, the sooner you can begin to enjoy the perks of real estate investment.

Don’t forget to refurbish the house

This part was both my favourite and exhausting. I was advised beforehand that if I wanted to increase the value of my real estate investment, I had to refurnish the house as well as possible. This is because a piece of real estate in top condition can claim more price than an unmaintained house. Also, one can decide to furnish the house well and then give it for rental, as I did, and earn a decent amount of money out of it. though, my ultimate aim was the big capital gain I would get, once I sell this house out. After that I intend to move on to a larger property with that money and thereby make a larger investment. These are the basic steps I followed while making the investment in real estate.




Why real estate investment is a good idea

I have always believed that making investments is the best use of money. Hoarding up money in one place does not serve anyone. However, when you make an investment, it lasts long and it gives you much more money in return than your put in. Out of the various kinds of investment options available, real estate has become quite popular of late. Properties are being bought and sold all over the world, and with much zeal. I have investments in the form of properties as well. So, what is it about real estate investment that makes it so popular? Read on to find out.

Real estate gives more leverage

Leverage is an important thing when it comes to investments. When you are using borrowed capital to earn potential income from the investment, you want it to be as profitable as possible. As I was advised well, I knew beforehand that the leverage is most profitable when it came to real estate investment. It is comparatively easy to get money from the bank for buying a real estate. This is often because, real estate is a tangible thing, which makes its worth more. And the returns one gets from real estate investments are highly profitable, which is why more and more people are investing in this kind of investment option. If you compare a non leveraged investment with this, it would come nowhere close. This was one of my primary reason for going ahead with real estate as an investment option.

Real estate gives numerous tax benefits

This was yet another big reason for me to go for real estate investment. Owning a property helps you handle a lot of personal expenses as deductions under business expenses. There are some clear benefits which first time property buyers tend to get. For a first home, the property tax I paid was fully deductible for income tax purpose. Even my mortgage interest was fully deductible in my tax returns. If the capital is leveraged for buying real estate, the cash flow that you receive from it will practically be tax free. And once you wait for a few years and then try to sell it, the capital gains you earn are huge too – because the value would have appreciated on the investment. This is basically why real estate is such a popular option for most.

Real estate is a good savings plan

I have no qualms about admitting that I am a terrible saver. And frankly, I am not the only one with this problem. Saving becomes very difficult if you have cash money hoarded up in a bank. I would always get the urge to spend a little bit of it, each time, as it was readily available. This is where making an investment can be a smart strategy – especially in a long term investment like a real estate. Say if you ended up investing in boquete panama real estate or Panama City real estate (yes, I’m a fan of the Panamanian real estate market right now!), then your money will be occupied somewhere and under no circumstances can you just take it. Also, the longer you keep the property, the more will be your chances of appreciating the prices of the property. So, if you sell it eventually, you will get huge capital gains. Hence, even if you do not have a lot saved out in the bank, in form of cash, you can always bank on this investment of yours to help you out when you need it. This is why real estate investment seemed like a very good option for me. It played a big role in giving me the feeling of a secure future.