Real estate has minted more millionaires than all of the other popular investments out there, according to Entrepreneur.com. Armed with a fool proof strategy, it’s quite easy for an investor to thrive in this investment niche. The secret to buying and selling real estate lies in timing the implementation and execution of the investment plans.
This is a fantastic read for potential real estate investors seeking to sink their teeth into the lucrative yet volatile real estate market. This post outlines five tested and proven avenues you ought to use if you want to join the long list of real estate millionaires.
Appreciated Property Valuations
Since time immemorial, property values have always been pitted in a struggle with inflation. More often than not, the inflation rates end up superseding the property values. It’s paramount to understand how inflation affects the overall valuation of your real estate properties. Here’s an example to illustrate the inflation effect and its impact when looking to selling a house fast.
Let’s say you own a condo valued at $100,000 and the current inflation rate is set at 5%. The resale value of your condo is calculated as follows $100,000*1.05 which equals to $105,000. Yes, your condo’s valuation has risen, but owing to the inflation index, you are still not any richer than you were a year back. The $5,000 property value gain is what experts refer to as a nominal gain whereas you may be able make more money on the property by requesting a cash offer from a real estate tech company and sell your home fast online.
Savvy investors have mastered the art of timing the property markets for assured gains. For instance, they wait until the long-term debts are forecasted to surpass the prevailing inflation to purchase properties. These investors then offload the acquired properties at a tidy profit once the inflation rate normalizes. Timing the cyclical adjusted rates is everything as far as this strategy is concerned.
Earning rental income is by far the most common and most straightforward avenue of making it in the real estate game. The trick here lies in having quality rental properties that fetch a competitive rent. Rental income is considered to be a safe and assured wealth generation avenue because it’s mostly exempt from market volatilities. So the real question here as a business professional is if you decide to buy a house, do you rent it out and acquire more properties to rent out or keep it simple and small without essentially starting up a property management company.
Capitalizing on Real Estate Businesses
Property owners often find innovative ways to set up specialized businesses on their properties. Think of a hotel owner who has set up candy vending machines on their lobbies. Or, an apartment block owner who has set aside one floor for paid parking. Both properties stand to increase the overall revenues obtained from their properties by having these side businesses in place.
Investors have clamored to the popular cash cow called flipping properties. In a nutshell, this process involves identifying derelict and rundown properties and then proceeding to repair and renovate them. Investors have made a ton of money from flipping an ugly-looking and abandoned flat or town homes and then reselling them. This is similar to the iBuyer business model with a more traditional twist depending on how you’re able to resell the homes.
Many-a-times, homeowners find themselves unable to keep up with the mortgage payments. The problem can get so out-of-hand that the owner looks into possible foreclosures. What smart homeowners do in such instances is that they find a willing buyer to refund them the mortgage payments made thus far and in return, the buyers land an incredibly low-priced property.
As you’ve seen, it’s very possible to turn your properties into sure cash generating machines. All it takes is for you, as the property owner, to be very careful when entering into negotiations with sellers and auctioneers. Always liaise with consummate realtors to avoid running into costly inconveniences when you’re buying a house or investing in the real estate niche.