Making money in real estate is not as complicated as it seems. That's why you find thousands of investors coming to property investment.
You can be the next tycoon once you learn the tricks you can use to succeed in real estate investment.
In this guide, you'll know what you should do to create a profitable real estate investment, whether it involves property or not.
Key Takeaways
What is real estate investment?
Real estate investment ranges from buying and selling raw land, residential, and commercial property.
The main aim of property investment is to gain high returns on investment. And that's why you should be keen to know how to make that happen.
4 Big Ways You Can Earn Money in Real Estate Investment
Property Appreciation
Suppose you buy raw land at Ksh. 200,000 and let it appreciate. You can sell the land some years to come at Ksh. 300,000, and you'll earn a cool Ksh. 100,000 without breaking a sweat.
If you find out that your land has valuable natural resources such as water and minerals, the price of it will automatically skyrocket.
You can also buy a home and sell it later at a higher price.
If you buy a rental property, it will appreciate if you maintain it well. Don't expect it to appreciate if you don't do simple things like renewing the painting.
Once property equity increases, you can use it as collateral against a bigger loan to buy more property.
Alternatively, you can always sell your property at a higher price than the buying price and make profits.
Again, you will make profits if you increase your rental income gradually. However, you should improve the property's appearance before you increase rental income. For example, you can change iron sheets, repaint, or add tiles to your houses.
However, property appreciation depends on location growth and inflation. For instance, big towns will have a higher growth potential than smaller towns. Rental property near universities and colleges will grow faster as the student population grows.
Inflation will also be a big factor in contributing to property appreciation. The USD was only worth less than 100 Kenyan shillings some years back. Now, in 2022, the price of a dollar is 120 shillings. That means that if that trend continues, land and property prices will keep appreciating.
However, you must learn to be patient with your property, don't expect it to pay your bills after a few months of investing.
Creating Regular Income
If you plan to retire early with real estate, you'll need a continuous income flow to help you with your daily expenses.
The most reliable way to create an ongoing income from the property is by renting it to tenants. Remember that the tenant will pay you monthly, so you'll have income. However, don't use your rental income before implementing the 50% rule.
If you buy a rental property, you can start getting your ROI as soon as you get tenants. The income level of rental property depends on location and the average tenant number.
Buying commercial property can leave you with more money since rental income from commercial houses, line offices, retail stores, and warehouses are higher than a rental property.
Regular rental income is the best way to keep you afloat in real estate investment. However, to continuously make profits, ensure you get a good property manager to help you make sober decisions.
Real Estate Investment Trusts (REITs)
REITs are among the best types of real estate that can help you make money without owning property. REITs represent a group of companies dealing with commercial and rental properties that allow members of the public to buy shares.
Once you buy REIT shares, you'll get at least 90% of the company's annual income. That's what the law supports.
If you plan to start in real estate investment, starting in REITs will be a good idea to help you learn industry terms.
However, you should ensure you don't fall prey to fake REITs that will siphon your hard-earned cash.
Buy and Hold Real Estate Property
Suppose you buy a single-family and rent them out. You will gain profits in terms of ROI. If you purchase many apartments, you can live in one and rent the rest. At least, you will save your house bills and still pay your mortgage using income from other apartments.
You can also profit by buying old houses, renovate and resell them. However, you should first learn about renovating costs before purchasing the property. Alternatively, you can get more profits if you know or learn how to renovate.
After renovation, you'll sell the property at a profit. Isn't that an excellent way to make money with real estate investment?
Another way to make money with your houses is when you live outside the country. So if you own a home/ house in Nairobi or its metropolitan areas, you can rent out your house as AirBNB to tourists for a short term. That will boost your mortgage repayment. However, you will only make good profits if the area is close to a tourist destination like Maasai Mara or the coastal region.
Factors to Consider to Succeed in Real Estate Investment
If you want to gain profits, you should understand what's at stake in real estate investment.
You should know how much you need to buy real estate. This will help you search for the correct mortgage value.
How fast can you get a buyer if you decide to sell your property? You should invest in a property that's easy to liquefy.
Before investing in real estate, you should have all the information you need to succeed. You can also hire a lawyer to help you with the legal terms.
Every business has risks, but the degree varies from one industry to another. Like in real estate, the most considerable risk is fire. So, can you compose yourself if you lose everything?
Conclusion
As you've read above, you can make money with real estate investment. All you need is to make calculated moves to help you make the right choices.
Real estate investment can help you retire early if you put in the right efforts.
Frequently Asked Questions
Can I become wealthy through real estate investment?
Yes. You can be super rich with real estate. All you need is to follow the correct blueprint to help you. It's advisable to learn first before investing in real estate. You can start by buying REIT shares to gain real estate investment experience.
What is the best way to make money in real estate as a beginner?
You can make money through property appreciation if you are a beginner. You can buy land, let it wait for five to ten years, and resell it. However, if you need quicker returns, you can buy a rental property. That will give you income as soon as you have tenants.
