If you read any personal finance books or are interested in growing your wealth, there’s always a trend when it comes to the advice provided. It’s always “invest” or “save.” And usually, they suggest investing in the stock market or saving your money in a time deposit. Sometimes, you’ll see financial experts recommend real estate.
But despite the popularity of real estate (and its frequent appearance in personal finance books), many people still doubt whether it’s lucrative or not. So we’re going to discuss the big question: is there money in real estate? And should you consider investing in it?
Is It Profitable?
The simple answer to this question is yes. Yes, it is. The real estate market has been going through a rocky phase for the past few years, but it has still kept its profitability. Prices are at an all-time high, and demand is just as high. And it’s all because real estate is an industry that’s always appreciating.
Real Estate Is Always Appreciating
You can find many subdivision, single house, andcondominium developers. Despite the life-changing events the world has gone through in recent times, the demand for real estate remains significantly high. Real estate does go through low points, but it never stays low- people are aware of the value of real estate and are quick to swoop in when the price gets slow enough.
Throughout the history of the economy, one thing has been consistent: inflation, and more specifically, appreciation of real estate value. If there’s one thing that we can be sure of, it’s that real estate will always come around. It’s onlya matter of timing and knowing when to buy, sell, or even hold.
Common Ways to Earn from Real Estate
There’s a wide variety of methods one can utilize to profit from the real estate market. Sometimes, they don’t even include buying a specific plot of land! Let’s take a look at some of the most common ones.
Apartments, single-unit rental, family rentals, any property leased for a considerably long time counts as a residential rental. It’s one of the most popular ways to utilize land, not to mention among the financially safest. Because shelter is a basic human need, residential rentals will never go out of the market. However, because it’s financially safe doesn’t mean it’s easy or risk-free.
For one, you need to maintain the property. This includes keeping and maintaining the utilities and a lot of property management. The location of the rental also decides its market value. If you’re considering getting into residential rental properties, take the time to learn more about it. It’s a very lucrative business, but you have to know what you’re doing.
Opposite residential rentals are short-term rentals that could last for a week or even up to a day. This type of property rental works best in touristy areas or vacation spots. Andapps like Airbnbmake the process of setting up your own all the more convenient.
Of course, this idea isn’t exclusive to beautiful areas that merit a holiday. It can also be used for urban areas with a more business-like atmosphere. Traveling businessmen are looking for cheaper alternatives to the traditional and expensive hotel experience, and short-term rentals are a great answer.
Buy and Hold.
Just like in stocks, you can buy a property and hold it until its value appreciates to an amount you’re willing to sell it for. You won’t be earning much at all during the time you’re holding the property. You will also have to pay property tax, but buying and holding can be a worthy investment if your property is in a remote location that will see development soon. Don’t sleep on properties like this; they’re often the ones that earn the most.
You Don’t Have to Buy Real Estate to Make Money in It (REITs)
And lastly, there are alsoReal Estate Investment Trusts or REITs. It’s essentially real estate’s answer to the mutual funds’ system stock investors use. Similar to that, a REIT company collects the capital of a group of investors and uses that money for a real estate investment. The investors then earn from the dividends made from those investments- and this is all without buying a property for yourself.
Real estate will always be among the most popular forms of investment. But it is the most popular doesn’t mean it’s the easiest to make money in. It still takes guts and expertise to flourish in this industry, but it merits looking into.