It has long been said that property is the best way to make money. It’s a true investment, and, as long as you can hold on for the long term, you should be able to walk away with a profit. Yet although this was true in the past, is it still just as true today?
In some ways, yes. It is still possible to make a profit in property. It may not be done in quite the same way as it once was – buying a property, keeping it for decades, and then selling it – but there are still ways to make money in real estate. Here are some of those ideas to think about.
Becoming a Landlord
If you can buy a property and then rent it out, you will make a consistent monthly income. It sounds fairly simplistic, and of course, there is a lot more to it than just this, but this is the basis of becoming a landlord and making that job profitable.
The key is to purchase a property in a sought after area. Of course, this will generally mean that the properties you are considering will be more expensive too, but this idea is less about how much you can make each month and more about ensuring that you don’t have an empty property for too long. The ‘nicer’ an area, and the more popular it is, the less risk there is of having to be without a tenant for many months, which would be extremely costly.
The difference between the amount you spend on your mortgage each month and the amount you charge your tenants in rent is your profit. You’ll need to research how much the average rents are in the area you are considering to ensure you will make any money, and you’ll need to put some money aside for repairs and other responsibilities, but in very general terms you can make money in this way.
Home Renovation Flips
It may be thanks to the many home renovation shows on TV, it may be because it seems such a good idea, but the idea of ‘flipping’ homes is one that has exploded in recent years. The idea behind this is to buy a run-down property that needs a lot of work doing to it, do that work, and then sell it on for a profit.
You’ll need to have a budget set aside for the work (or you’ll need to have the time to do it yourself, although to make the most profit it must be done to a high standard), but this can certainly work. Ensuring there is a proper plan that includes a realistic budget and a timeframe to work to are some of the most important parts of getting this idea right.
Sometimes you can ‘flip’ a property without doing any work at all. In this case, you will be looking for someone who wants to sell a wholesale house – that is, someone who is desperate to sell, known as a ‘motivated seller’ – and someone very keen to buy. Your job is to bring them together, and you won’t even have to spend a lot of money doing it.
Essentially, you sell the property before you have bought it. Although there are risks involved, it does mean that you immediately make a profit (because, of course, you will be selling for more than you purchased it) and you don’t have to do any renovations at all. Known as ‘contract flipping’ this idea will require a great deal of research, but if it works, it can create a huge profit margin.