How to Make Money Investing in Real Estate
There are two main ways that investors make money from their real estate properties: appreciated value of the property over time and cash flow from rental income.
Despite the ups and downs of the real estate market, most properties increase in value over the long term.
The trick to being able to make a profit is buying a house at a low price and riding out any downturns in the market until it’s a better time to sell. That’s why it’s so important to purchase any investing properties with cash and keep money set aside for repairs.
To make money off a house that’s increased in value, you have to sell the property, which can take time. That’s why it’s important to have three to six months of expenses saved in an emergency fund in addition to the money you set aside for upkeep and repairs. If the unexpected happens, you’ve got cash to cover it without dipping into your other investments.
When you pay cash and have an emergency fund, you lessen the risk of being forced to sell a property at a loss. Instead, you can hang onto the property until it’s a good time to sell.
Generating income from rentals is the top reason why investors purchase a property.(5) Once you’ve secured renters, owning and renting out property is a great way to make additional income with a minimal amount of effort.
Other than needing cash on hand to cover any repairs or maintenance, your part is pretty hands-off. There’s even less for you to do if you hire a property management company—though that will cut into your profits. Regardless, you make money simply from being the owner of the property.
Keep in mind, though, that dealing with renters can be frustrating and time-consuming. It can also be costly if the renters damage the building or unit of property. You may even have to hire a lawyer if you need to evict a tenant.
J&P Investments Inc. has the expertise to successfully help you navigate the real estate market and maximize you return on investment. Contact us today.