Education and news for smart DIY landlords!
In terms of making a profit, investing in real estate has always been one of the best options. Not only does it have a low risk and high return potential, but it can also be a satisfying and lucrative financial decision. Moreover, real estate investors can use leverage to buy property. This means paying a portion of the cost upfront and then paying the remaining amount in installments (plus interest) over time.
In the United States, first-time homebuyers only need a downpayment of as low as 6% to purchase an entire property. With minimal capital required, you already have a profitable investment in addition to having a permanent residence. And what makes real estate investment even better is the immense diversity in offers.
There are several types of investment in real estate. And while choosing the best one for you can be challenging, you should invest in the one that generates the most profit. That said, here are the five most profitable investments in real estate. Read on.
Commercial space is one of the best real estate properties to invest in due to its high return on investment (ROI) potential, especially if it has an excellent location. Generally, you can make an income by buying commercial spaces, including industrial, retail, offices, or parking spaces, and renting them to businesses.
You can also earn money through appreciation as the property’s value increases over time. The bigger your commercial space is, the bigger the profit. For example, if you have an apartment building, you can lease your property to more than one tenant and collect multiple monthly rental payments. On top of that, companies are more likely to pay rent on time, as they want to ensure they keep the space.
Investing in residential properties may be a safer path to take, but it doesn’t mean it’s a less profitable investment. Like commercial spaces, you can earn money from residential properties through appreciation and sell them for a much better price when the value is at an all-time high. You can also generate income from monthly rental payments, only this time you’ll be renting to individual tenants rather than a business.
Some tenants may fail to pay on time or refuse to pay for any damages, but if you have a premium location, it’s not that hard to find other interested tenants.
Airbnb or vacation rental is another profitable real estate investment option that profits from short-term rentals. Although it’s a relatively new concept, its high-income potential has made this strategy undergo such significant growth in recent years.
Apart from buying a real estate property, you need to design it into something suitable for an overnight stay. It could be a condo unit within the city or vacation home from out of town. Your nightly rate will depend on the quality of your home and the services you offer.
House flipping is another top real estate investment option for investors looking to make money fast. It involves buying a property to resell it. However, this investment requires an investor to have extensive knowledge in real estate assessment, marketing, and renovation. The idea is to find a property in bad condition, buy it cheaply, fix it up, then sell it at a significantly higher price. Your income will depend on how much you’ve raised the property’s value after the repairs.
Real estate wholesaling is the best investment strategy for investors with minimal investment capital. Its potential ROI is similar to house flipping but doesn’t require as much work. Real estate wholesaling applies to both commercial and residential real estate. You can generate profit by making a contract with a property seller and then assigning the contract to a prospective buyer at a much higher price. The best part is that you don’t actually need to buy the property. However, to maximize your profit, make sure the buying price is significantly higher than the selling price.
The beauty of real estate properties is that they are guaranteed to generate income, whether the overall market is up or down. You can either wait for the perfect selling opportunity where your property’s value is at its peak or rent it out to gain a more stable income. But whatever you choose, keep in mind that you’ll only be paying a relatively small part of the property’s total value upfront — making it unique from other investments.
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