The goal of every real estate investor is to make money. However, it is not as simple as buying several investment properties and waiting for the cash to roll in. Although real estate investing is a proven way to build wealth, it is a big commitment that requires plenty of patience and a lot of money. Here are some tips for people who want to buy real estate the right way.
Purchasing real estate is more than buying houses and renting them to tenants. In fact, there are several ways to start investing. From traditional home ownership to fixing and flipping properties, here are the most common ways to make money in real estate.
Home Appreciation
Although home values fluctuate, they typically increase over time. Many investors will buy properties at less than market value and wait for home prices to rise. Once values increase, investors will sell their real estate and pocket the difference. Although it sounds simple, investors must remain patient since it does take time for values to rise. Also, investors are responsible for any repairs, taxes and general maintenance.
Income From Rentals
Many investors buy properties and rent them out to generate revenue. Renting properties is a popular way to build a passive income. Also, rental property owners enjoy the benefits of any home value increases. However, owners are responsible for any repairs or maintenance, and if investors hire a property management firm to take care of the rentals, it cuts into their monthly income from rents.
Flipping Properties
When investors flip a property, they buy it to fix it up and put it on the market for sale as fast as possible. The goal is to purchase properties for pennies on the dollar and renovate them for relatively cheap. However, investors must buy properties at far less than market value to make any money. Flipping properties is a proven way to make handsome profits, but it is far riskier than what is depicted on television.
There is no “one size fits all” method to real estate investing. Although it is a powerful tool in anyone’s wealth-building strategy, new investors must realize it has inherent risks. Investing in real estate requires a lot of money upfront, and what looks like an excellent investment at first could lead to significant losses.
About The Author
Jack Nourafshan is a distinguished real estate development professional and entrepreneur in Los Angeles, California. He is the President of Reliable Properties, a real estate acquisition, development and management company in the Los Angeles area. Jack has over 30 years of professional experience that has made him known as a leader in the industry. Jack Nourafshan started a blog on entrepreneurship to share his insight and experiences for aspiring entrepreneurs.