Real estate has – and always will be – a brilliant investment.
This is because no matter what, people will always need homes and as the population of the earth continues to grow, more and more homes are needed every single year. Purchasing your own home is also a great investment, because not only are you doing this with intent to give you and your family somewhere to live, but you’re also working towards a path of financial freedom once you’ve paid your mortgage.
However, if you’re looking to make more money from real estate, there are a plethora of options to consider. Whilst the sale and purchase of property might be a little bit more difficult at the moment due to the pandemic, people are still able to buy, sell, and move into new properties, and this is great news for people looking to invest in real estate like yourself. Not sure where to start? Take a look at these tried and tested ways of making money from real estate in 2021.
Purchase for rental
Not everyone can or ever will be able to afford to buy their own home, and this could be down to a multitude of reasons such as being unable to save for a deposit, not having enough money coming through to afford a mortgage, or even simply because they don’t want the pressures that come hand in hand with owning a property. However, rental investing is a brilliant way to earn extra income each month. Here’s how it works:
- You buy a property, make any necessary repairs and place tasteful decor.
- You list your property for residential rent through a real estate agent.
- People view your property, and place a deposit that will cover any damages made to your property while they’re living there (this is usually a month and a half worth of rent)
- Your real estate agent will draw up a contract, and both parties will sign
- Each month you earn a tasty side income from your property purchase. If you’ve chosen to buy a property in a desired area or you’ve purchased a large and lovely property, the amount you charge for rent each month will be a very nice addition to your finances!
Are there any cons?
Thankfully, there are only two cons that come hand in hand with purchase for rental, and that’s having to pay for repairs at any given time, and also your property being empty for some time. You’re responsible for paying for this at all times. However, if you’re clever about where you buy your property, you shouldn’t have any issues.
Purchase for resale
This option is brilliant for those looking to make a tasty profit from their investments. The premise is extremely simple! You buy a cheap property that needs some work. Hire help or spend your own time renovating the property, and then put the property back on the market for much more than you paid for it. Because you’ve spent the time making the property more desirable again, you’ll find that people are interested and more than willing to meet your asking price. Depending on the amount of work that needs doing to the property, you could have an extremely fast turnaround that could leave you with thousands more in your pocket than what you started with.
Are there any cons?
If your property is on the market for some time, you could be losing out on money and end up losing your profit. However, thinking long and hard about location and desirability before purchasing should help reduce the chances of this happening.
Purchase for business
This idea works very much like purchase to rent, apart from with businesses, you tend to be able to charge more for the space you’re hiring out, depending on what your property is able to offer. This is again, a fantastic way of making money through the purchase of a property because once you have secured a tenant, they are likely to stay in your property for many years, meaning you’ve got plenty of extra income. This is especially true when it comes to businesses, because a business relocation is less likely to happen than someone choosing to move to a different area.
Are there any cons?
Much like with purchase to rent, if there are any repairs that need to be made then you’re responsible for them. Also, in the event a business does decide to relocate, you may be left for some time with a property that’s empty, yet you’re expected to pay the mortgage still. With a good realtor, this problem shouldn’t be a long lasting one.
Purchase for vacations
Another incredible option that could make a very tidy sum of extra income is choosing to purchase a property to rent out for vacations. It works very much like purchasing to rent, apart from a few different steps:
- With purchase for vacations, it’s a wise idea to spend a little more money on the decor, because it will be more attractive to holidaymakers and you can charge more for their stay.
- You will have to fill the property with all of the furniture holidaymakers might need, from appliances to couches and beds. However, once they’ve been purchased they can be used again and again.
- You will need to hire a cleaner to clean the property between each set of people staying. However, the money you’re earning from a week or two should easily help cover that.
The great thing about holiday homes, whether they’re somewhere sunny, somewhere snowy, or even in the same town you live in, you can charge a substantial amount more for people to stay – even if only for a short time. Most holiday lets are priced from Friday-Friday and some holiday lets charge more for staying at the weekend, and for high demand seasons such as the summer. There’s a lot of money to be made with a vacation rental, but you’ve got to get every detail right first.
Are there any cons?
There are a few more cons with vacation rental, and they are as follows:
- You have to buy everything which means a larger investment initially.
- It’s your responsibility to ensure your property is safe for people to stay.
- Some mortgage lenders don’t permit short term leases. You’ll need to check this before doing so.
- If your vacation rental is abroad, it may prove difficult should there be any problems that arise.
- Making your property known requires a little more than a real estate agent, but it’s totally doable.
As you can see, there are 4 incredible ways that you can make money from real estate in 2021. While there are cons that come with all of them, we think you’ll agree that the pros outweigh them, and the potential money you could earn from property investment is extremely attractive.
You should make your decision based on how involved you want to be with the property, how much money you have to invest, and also whether you can afford the upkeep should those cons come into play.
Whatever your choice is for real estate investment this year, be sure to consult a financial advisor before doing so to ensure you’re in a stable financial position and you’re not risking any of your hard-earned money.
Finally, stay safe when buying and selling properties. While people are still able to buy, sell, and move during the pandemic, it doesn’t eliminate the risk!