Most of us will inherit a family property during our lifetime. Others will purchase real estate as a way of making money. No matter the situation, there are lots of different things you can do with these assets. From flipping homes to renting them, you can earn some extra income from real estate activity.
Without further ado, here are six tricks to make money off of real estate.
Reverse mortgages are especially popular among older folks and, in particular, people who don’t have next of kin. With a reverse mortgage, you will receive money as long as you’re alive. The amount of funds is proportionate to the value of the real estate. If you leave the house, or if you die, the obligation stops, and the borrower can take possession of the property.
There are different reverse-mortgage pros and cons that you will need to consider before signing such an agreement. Of course, the biggest issue is that your family will eventually lose possession of the house. However, if you have a small pension, this can be a great method of financing yourself during old age.
Long Term Leasing
Most people with empty houses or apartments prefer long-term leasing. This is a great way to generate passive revenues with little to no investment. Long-term leasing is especially great for working people who don’t have enough time to hassle with short-term rents or Airbnb.
The great thing about long-term leasing is that it is contractual. In other words, you know exactly how much money you’ll receive each and every month. And while there are some exceptions to this rule (for example, if you’re dealing with unruly tenants), in most cases, you can rely on these revenues to fund your own living expenses. Alternatively, you can even rely on these revenues to get a line of credit.
Flipping properties is a simple concept that requires a certain level of engagement. Basically, you purchase a rundown house or an apartment, and you renovate it for a profit.
A very important thing about flipping properties is to purchase real estate in a good neighborhood. In the end, once you finish refurbishment, you will need to find someone who is actually going to buy the property.
Flipping properties is much more lucrative for contractors and handymen. If you’re able to reduce the costs of repairs, you can end up earning much more money compared to someone who doesn’t have the necessary skills or connections.
Contract flipping is another type of property flipping. However, in this particular case, you will only have the role of an intermediary.
Basically, you need to find an owner in distress and purchase the house well below its potential market price. Once you have possession of a contract, you can take your time and sell the property closer to its real value.
Contract flipping is all about timing. You need to have an active role in the market to recognize these opportunities. Of course, you need to have ready cash to fund the project. Ideally, you should try to flip the house as soon as possible so you can take this profit and invest it in the next project. However, even if it takes some time, this can be a very lucrative investment.
Airbnb is a real estate gig that requires a high degree of involvement. If you wish to maximize potential profits, not only should you reply to all the messages, but you should also clean the house yourself. Paying for cleaning services can make a major dent in your revenues, so it is much better to do everything yourself.
Airbnb is great for all those who don’t have a job or work part-time. In other words, this will probably be your main source of revenue. It is a great alternative to long-term renting.
Commercial and Residential Building
Everyone wants to get into the commercial and residential building business. Buying empty lots and building commercial and residential buildings is a highly lucrative business. However, unlike some other investments on the list, it has a high barrier to entry.
Even if you have an old empty property, getting a line of credit to build a building can be really tricky. This is why the majority of the project should be financed from your own pocket. Once you rent or sell your first residential or commercial building, things become much easier.