4 Practical Ways to Make Money in Real Estate

Have you had some bad experiences in other business ventures or are curious about making money in real estate? If the answer is yes, it’s worth learning how to make money in real estate.

 When you own property, you’re responsible for paying mortgage payments, utility bills, and property taxes. However, once you sell your property, that burden shifts to the new owner. But why wait so long to make money in real estate when you can explore how to make money in real estate now?

Making Money in Real Estate: Increasing Property Value

It’s possible to earn money by doing nothing other than simply real estate investing. This is because the value of real estate almost always increases, something you will most certainly realize once you sell a property.

Even more, profit can be earned by developing undeveloped land. Rural areas are becoming increasingly urbanized; with that, undeveloped land is increasing in demand, and with it comes an increased earning potential.

Although it is rare, there have been occasions when the value of land appreciates thanks to the discovery of valuable minerals like oil or natural gas.

The location of a residential property is often the most significant factor in its appreciation value; property near transit routes, shopping centers, and educational institutions contribute to property appreciation.

Home improvements also have an impact on both residential and commercial property appreciation. Installing a central cooling and heating system, building an extra bathroom, or remodeling a kitchen to include smart appliances can do wonders in increasing a home value.

Also factor in the impact of inflation when considering property appreciation. An annual inflation rate of 5% means that one dollar would buy you things about 95% of the same value the following year. In residential real estate investment, if a house were worth $50,000 in 1980, even if you didn’t do any further development, it would be worth much more today.

The flipside of inflation is that even though you would sell a property at a higher price, other goods would also be proportionally higher.

How to Make Money in Real Estate

Besides traditional and passive approaches, you can take proactive steps to turn your real estate investing into a profitable business.

1) Rent a Space

If allowed by local regulations, you can add a rental suite to your property. If there isn’t a separate basement suite or In law apartment already on the property, you could convert a garage into a living space or build a separate free-standing structure to rent. Research what’s required to convert such spaces to living, rentable spaces beforehand it may be a requirement to include separate entrances, an attached bathroom, or a full kitchen.

Additionally, figure out how much income the rental space will generate. You should also calculate investment recovery, like how many years it will take to earn back your initial residential real estate investment before you start earning profit as a landlord.

If the rental space doesn’t work out, consider renting out part or all of your property if you have a primary residence elsewhere. It doesn’t matter where the property is located you can earn a significant profit if the house is in a prime location or close to popular locations like colleges, shopping centers, or a medical district.

To make money in real estate, you have to decide what space you’re going to rent. A bedroom attached to a bathroom will likely earn more rent than a bedroom in which the tenant has to share facilities with others. There are rental sites like Airbnb that may help facilitate room rentals. Make sure you take professional photos before you list your room on the site.

Of course, it is great if you live in a place that appeals to tourists. During the vacation season, renting a whole unit can be very profitable.

2) Rent Out Storage Space

Turning your apartment into a rental unit is not the only option at your disposal. If you are not comfortable with that, you can instead choose to rent out available storage space. Of course, the profit you’ll earn doing so will depend on the size and characteristics of the space.

When downsizing, people often resolve to outsource storage space for their furniture or other goods. Many people may also own recreational vehicles like motorbikes, RVs, or boats, and they’ll want to protect them from extreme weather.  Unfortunately, their current residence may lack the space needed to store these vehicles.  If you have space, you can allow people to store their vehicles in your garage for a fee.

3) Provide a Site for Special Events

If you own a large piece of land, you may think of making money in real estate by renting it for small special events. Or, if you have the resources and space, you can offer additional amenities and earn additional profit.

The most common option real estate investors with large sections of developed land in rural areas utilize is making their land available to rent for outdoor weddings. However, before you hold an event, confirm that such events are allowed. You might be required to get a special permit for holding special events.

4) Run a Home Based Business

In any business, you excel by keeping your expenses low. This is where real estate property has huge potential. Running a home-based business helps keep your business’s overhead low. Additionally, it will give you an advantage in terms of income taxes.

Conclusion

Before real estate investing, you should consider two points. The first is the insurance risk. When you have homeowner’s insurance, you cannot use the same policy if you decide to rent the property. You will have to get landlord’s insurance for that purpose. Second, make sure that you are not taking on more than you can handle. Being a landlord or managing events can require a major time commitment. If you can handle the two aspects, you are more than ready to make money in real estate.