So You Wanna Invest in Real Estate? Here Are Some Tips to Consider
Investing in real estate can be a great way to make some money. If you’re a landlord, you probably know this already. Like anything else, it isn’t set in stone that you’ll be successful. However, there are plenty of opportunities to make some money off investing in real estate. The fact of the matter is, Americans move frequently; American homeowners move every five to seven years on average. This means there’s plenty of opportunity within the housing market to make some money. If you’re interested in knowing how, here are some suggestions for you.
Become a Landlord
One way you can make some money off a property you already own is by renting it out. About 27% of Americans rented their home in 2016. There are always folks looking to rent. If you have a spare bedroom or a basement that could easily be renovated, it may be worth considering. The income you make from monthly rent is money in your pocket each month. This can be a relatively easy way of establishing some extra cash flow.
If you’re looking for something a bit more upscale than just a bedroom in your own home, you can also buy entire apartment buildings or own multiple homes all throughout an area that you rent out. While this may take some additional resources to get started, if you have the money to purchase enough properties to rent, this can be a great way to make income. Renting out multiple apartments or rooms at once, especially if they’re nice, can really increase your monthly income.
One of the positives to investing in this market is that it’s relatively safe, meaning there isn’t typically a time where you won’t have renters. Keep in mind, however, situations like COVID-19 have made life difficult for landlords. While a global pandemic is not a commonality, there are still risks to consider. That said, 97% of real estate investors plan to increase their capital allocation to real estate in the next 18 months, which means there is still room for growth within the industry.
Consider Return Value From Renovations
If you’re hoping to make money off a property you already own, you may be in the renovation business. Finding fixer-upper homes and flipping them can be a great way to make money off real estate. The advantage of this is that there are always homes in need of improvements. The difficulty is finding a home where the improvements needed don’t outweigh the value of the home afterward. You need to be able to make sure you’re not spending more money than it’s worth in the end.
If you’re looking to make money off flipping homes or simply just improving your own when you go to move, you’re going to need to do some research about which renovations yield the highest return. Anything that has to do with curb appeal is a safe bet when it comes to return value. This means landscaping, the driveway, roofing and siding, windows and doors, and more are all included. Additionally, minor kitchen and bathroom renovations similarly trend towards a higher return value. Be sure to figure out where within the home your improvements would be the most necessary and start there. It’ll be important that you don’t spend money and time fixing something that doesn’t need to be fixed.
It’s clear there are opportunities within real estate for investors to make a profit. The biggest thing to keep in mind is to be cautious with where you spend the money that you’re investing and to feel confident it won’t go to waste. Like any investments, you’ll need to weigh the pros and cons. However, real estate is largely a safe place to invest.