How to Make a Decent Profit in Real Estate
Real estate is a long-term investment. Sure it has a certain risk and debt laden component attached to it. This also means that in many cases, people may not be able to afford to invest in real estate.
This isn’t a complete misnomer, but in a survey conducted by the rich people’s bible Forbes, 8 out of 10 Ultra High Net-worth Individuals reported to have made their fortunes in real estate.
People like Ted Turner, presidential hopeful Donald Trump and even mavericks like Richard Branson have always had real estate as an important component of their investment portfolio. Real estate therefore isn’t as ‘impossible; an investment avenue as it is made out to be.
Think of it as this, if you already have a home that is free and clear (somehow) of a home loan, your investment portfolio already has a decent enough liquid and mutual fund component to it, and you’re looking at a certain amount of immovable assets to park funds in, you could stand to profit from real estate. Here’s what you need to do as a strategy to make a decent amount of money from real estate.
- Buy to lease: Whether it is a home or a shop front, or even a gala in an industrial estate, you should always look to buy real estate with a view to hold it over time, and lease it. Commercial real estate is where the most returns can be made. After all, even a single shop front, over 5-6 years time, will not only yield more in terms of rent, or lease, but even in pure economic terms will be worth oodles more than any home you purchase at any given point. The rent realized from commercial properties is liquid cash that can be used for further investment purposes. Rent worthy industrial or commercial space can easily be sold to the right buyer in the long run.
- Be smart with your purchases: While buying a commercial space outright, with no loans may not always be possible for all, you should shop around for the best bank loans and deals on finance with favorable credit terms. Having a positive credit score will work in your favor. You can do so by making sure all your credit card bills, personal and auto loans and even your student loans are either cleared or are in a positive state with your monthly installments being paid on time.
- Location: In the real estate game, location is everything. High street over side streets, a mall over an industrial area, a quiet suburban neighborhood over a crime infested one. Sure one will be cheaper over the other, but there’s no question about which one’s going to be more lucrative to you in the long run.
- Maintenance: Once you’ve bought a property, you investment doesn’t end there. A property needs to be well maintained in order for it to fetch a good return either in rent or sale. Real estate acquisition mandates maintenance and as such a person shouldn’t buy real estate if they have no intention of maintaining it.
These are four rather simple ways to make your fortune in real estate. We hope this post inspires more people to buy real estate, with the intention of profiting from their purchase.
Broker’s view: Fear factor should be absent when investing in real estate
Category: Investing
