Investing in real estate is just like investing in stocks and cryptocurrency in such a way that, the primary means of earning from this business venture is through ‘appreciation of value’. When you buy properties, their value can increase over time, and this is heavily affected by numerous factors as well, either accelerating the appreciation in just a short span of time or in worst cases, deteriorate in value but those odds are unlikely.
However, there are still notable differences when it comes to investing in real estate compared to traditional stock market or crypto investments. One such difference is that investing in real estate involves tangible assets. The risks involved between stock exchange/crypto currencies and real estate differs greatly; In stocks and crypto currencies, you are usually going for a ‘do or die’ or ‘go for broke’ scenario – you either profit or not as you observe trends.
In real estate, you must also consider maintenance costs, utility fees and insurance as part of your upkeep costs in maintaining your properties and this is something that cannot be neglected as well; as previously mentioned, a property’s quality and how well-maintained it is contributes to its overall value. You wouldn’t want to buy a run-down house, wouldn’t you?
Again, the goal in investing at real estate is to put your extra resources at work today so that in the future, you’ll profit from the returns as extra income aside from your primary source of income such as other businesses or job. And just like any other businesses, the profit must be able to cover all your investment expenses including taxes subtracted from your potential gross sale.
Different ways to profit with Real Estate Investment
Now that you know the basics behind real estate investment and how it differs with other types of investments, we’ll discuss how you can actually profit from it.
Ancillary Real Estate Investment Income – This includes paid utilities placed inside your properties such as vending machines, public rental computers, or other businesses that works in conjunction with your properties’ operations. When executed properly, this becomes a remarkable source of income on top of any of your existing real estate investments. Consider this for a moment; You’re running an apartment complex so naturally, not all of your tenants will have their own washing machine. You could use this opportunity to capitalize on that situation by setting up a laundromat as well in your apartment for your tenants’ use. Over time, the income generated from this extra utility and convenience becomes remarkable as well.
Real Estate Appreciation – Appreciation is one of the primary methods of earning in real estate investments. We mentioned before that various factors play can cause a property to increase in value over time and that includes scenarios such as when the area your property is located becomes developed; A busy area is always a good sign because the growth of local business around already promotes the value of all properties located in that area. Another example would be when a new shopping mall or major establishment is built in that area or when plots of land becomes scarce. While these examples may sound appealing and wishful, take note that it is still not easy to predict because natural calamities such as disasters could still occur and this can have a negative impact on all of the properties’ value in that given area.
Cash Flow Income – Another popular and common real estate investment structure. Cash Flow Income comes from property investments such as apartment buildings, office spaces for rent, warehouses, storage units, and even running your own BnB (Bread-and-breakfast). In this setup, the primary motive behind your investment and procuring of properties is not to sell them later on as the value appreciates, but to run a business using those properties and generate a stable flow of income.
Recreational establishments and stores also fall under this category.
Real Estate-Related Income – It can be considered that this type of income is akin to how a stock exchange or cryptocurrency trader profits. Specialists such as Real Estate Agents and brokers make money out of the commissions and referrals for each property being sold or bought under their agencies – Their the middlemen or people pitching these properties to sellers and buyers and some real estate companies keep a small percentage of rents for all day-to-day operations and depending on the agreement.
Beginning your real estate investment plans
Now that you know the fundamentals of real estate investments, you might probably be thinking already to yourself the various possibilities and plans you could come up with for your next business or additional income source. This is an exciting process but it’s still important that you conduct a proper surveying and feasibility study with diligence first for this undertaking.
Beginning your real estate investment plans
Now that you know the fundamentals of real estate investments, you might probably be thinking already to yourself the various possibilities and plans you could come up with for your next business or additional income source. This is an exciting process but it’s still important that you conduct a proper surveying and feasibility study with diligence first for this undertaking.