Ways to make money in real estate interest almost every person, who wants to start his own business.
There is no wonder, because real estate is the only product, which is made by humans, and which does not lose its cost on a monthly basis.
That’s why let’s try to discuss in details all questions concerning ways to make money in real estate.
Ways to make money in real estate by renting
From the business’s point of view such ways are considered to be very appropriate, right and demanded on the market among other business-approaches.
It is simple, stable, understood by everyone and does not require any particular knowledge or education in this sphere.
Surely, you’ll have to find the common language with the lease holders, and perhaps with the neighbours.
Nevertheless, if you properly draw up and sign all documents between you and your tenants, this will definitely cause no problems at all.
Long-term rent is a possibility to organize your time, so that did not have to spend more than 1 hour per month in order to drive to the flat, take the money, visit the controlling company to pay for the municipal services and get back home.
Part-time lease for an hour or a day.
This is one of the most popular inquiries on any real estate portal.
Moreover, during the crisis the number of clients only increases.
Do you wonder why? I guess, you will probably figure it out on your own.
Hotels become more expensive and not everyone can afford such expenses anymore.
The main thing in such ways of doing business is location.
A shop and a bus stop must definitely be nearby.
The flat itself must look modern and nicely furnished.
The option “So so” is the worst one.
Speaking about the flat’s size, it’d better be one-room or two-room flats, which were transformed in beautiful studios.
The main clients are the young couples, business travelers, spouses, who have recently had a fight, and tourists.
A flat may be rented for a couple of hours as well as for a couple of weeks.
Another peculiarity of such business is having regular customers.
If your flat has good quality and the adequate price, people are sure to turn to you again and give their recommendations to their friends.
Profitability ratio in this business, even taking into consideration additional expenses to hire the staff to clean the rooms, is more than two and a half times higher than the profit from a long-term rent.
Surely, it is easier to make money in real estate for those, who already have it.
Nevertheless, if you own no square meters, it will not be your stigma.
The key term here is real estate.
In order to manage the real estate, you should not necessarily become an owner.
You may also be a leaseholder and make money on subleasing.
Usually, aspiring businessmen start with renting a flat, which belongs to someone else.
Surely, the owner will not probably allow you to make global changes in the flat (repair, install new furniture).
However, there may be some exceptions, if you make a deal with the owner that you’ll repair it on account of the rent fees.
Eventually, the income from these ways of doing business may be directed to its widening, and eventually create the whole network consisting of several similar apartments.
Interesting: How Can I Make Money without a Job?
Opening a hostel.
If you own not a one-room flat, but a rather big three-roomed apartment, you should consider the possibility of opening a hostel in it.
Hostel is a west-european scheme of a hotel, which offers its clients sleeping accommodation off-the-grid for a short or a long term.
Conveniences like bath, shower and kitchen are in general use. In such rooms there may be simultaneously placed several people, though in fact, a room is often rented by a company or rented as the whole, because it’s still cheaper than a hotel suit or a rented flat.
The rooms themselves are furnished with sleeping accommodations and the system of conditioning.
Hostels are very demanded in big cities or resort towns.
Hostel’s profitability is in general equal 15 %, i.e. something between the income from leasing an apartment for a long term or leasing it for hours and days.
Ways to make money in real estate by buy and sell
Such ways to make money in real estate are also rather good.
Everything is quite simple here – you buy a flat, bring it to order and sell it.
May people are quite skeptical of how these ways are going to work during the crisis, but the thing is that they always work.
The main principle here is to look for the cheapest apartments, with the worst photos.
This is sure to give you a discount from 10% to 15% on the market price.
Hire the most available finishers as well.
This is not a premium repair.
Nevertheless, you must always take care of two things – the porch and the view from the window.
Besides, your main goal here is not only to make money, but to do it fast.
Buy fast, repair fast, sell fast.
That’s why say “no” to the luxury apartments, because you need the most mass market ones.
No finish materials ordered from Europe – only those you can take home at once.
Do not look for the finishers for too long, and take those, who are available – though sometimes it may cost you more.
Practice shows that if you control everything regularly, i.e. three times a day; a one-room flat may be brought to order from scratches for one week.
This already includes replacing windows and the entrance door.
Read also: What to Sell to Make Money?
For an apartment to be in good condition you need:
- to replace (if there is a necessity) hot and cold water risers and hitting pipes;
- to put inexpensive tile (very often it looks rather “imported”), cheap but new sanitary ware;
- to put a cheap metal door (“China” for $100 is a rather good option);
- to restore the windows (if there is something to restore) or to put new economic vinyl ones (the cheapest window sections, the more window sashes that do not open – “dead windows”, the least additional furniture, plastic rather narrow window sills and plastic jambs);
- to install inexpensive, but new accessories (sockets and switches);
- to do the selective repair to the concrete blinding coat on the floor;
- to put cheap, but new linoleum, which looks like the parquet (it actually looks the best);
- You should not level the walls, but you’d better hide the brightest popouts.
Inexpensive vinyl wall coverings of the proper structure are sure to hide the most of uneven places.
- to restore interior doors (or to replace them with cheap hollow doors, which were produced in the nearest countries, but without wood from the closest carpenter’s workshop – it will either dry up or cost you much more money).
Such repair (which in better case will cost you two months and $2-3 thousand) will definitely refresh any flat, even the most “killed” one.
Such ways to repair the flat are sure to make it visually look at least two times more expensive because of your investments, and sometimes even significantly more.
Ways to make money in real estate by investing in house building
One of the most widespread and simplest ways to invest in real estate is a common enterprise with the local developers.
- In this case the investor chooses a partner from the people or companies with excellent reputation.
He chooses someone with the required experience and good knowledge in the sphere of development.
- Such partner can take a loan in the local bank on the project of redeveloping of the residential or commercial real estate (and on the real estate of combined type), increasing the profitability by it.
- As soon as the common house building is over, the income is divided on the conditions, which were written in the contract.
- As an option of such cooperation, an investor may not be a partner in the full sense of this word, but have only a flat rate, providing a developer with money as a loan at interest.
- The farther from the center this building will be located, the higher will be the interest: central districts will bring from 8% to 15%, remote areas with apartments of economy class will bring from 15% to 25-30%.
Under some other circumstances the interest from the income may be even higher: high risks of the project leads to the increase of percentage.
The first risks are estimated by the permission to build on the bought ground.
On a note: How to Make Money Selling Cars?
Ways to make money in real estate by building
Getting permission to build on the bought area (usually it’s already existing real estate) is also one of the best ways to make money.
An object with permission increases in value, and very often very significantly, because it lowers the risks of the project a lot and reduces the terms.
Just in two years the income may be 100% or even more.
Actually, all specialists on permission obtaining build their businesses on it – they buy the area without permission to build, consult local authorities, obtain permission and then resell and make money.
The terms of such projects vary from half a year to 3-4 years depending on the difficulties to obtain the permission.
The main condition in this strategy is for the investor to know clearly the local laws and rules of definite municipal establishments or a thorough selection of the specialists in this sphere, which are going to act for the investor’s benefit.
From all ways mentioned above, every person, who thought about starting such business, will definitely find the way to make money in real estate, which he likes the most or can afford.
Nevertheless, you should not wait to receive the immediate income, because real estate is not the goods that bring money in the first days.
Still, if you organize everything right and properly count everything, you are sure to make much money in the near future.