At some point, all business owners come to learn that making their money isn’t entirely down to how they run their business. Rather, building wealth outside of the business can be just as effective, and real estate is one of the great ways to do just that. However, not everyone makes their money in real estate in the same way.
Depending on the opportunities available to you, here are some of the paths that might work for you.
Buying and Selling
The simplest kind of real estate transaction there is. This involves buying a property and selling it back off, hopefully at a profit. How do you find profit in selling a property? Well, the first is to look at the investments that can improve the value of that property, such as repairs, new luxuries, and better curb appeal. Otherwise, if you can keep an eye out for neighbourhoods that are showing signs of improvement, such as attracting new businesses and construction projects, then you can typically find the housing prices around those developments starting to rise as well. However, spotting these opportunities before other investors can be the tricky bit.
Grabbing Some Land
The value that can be found in real estate isn’t always about the property itself. In fact, the general rule is that you’re trying to fight the depreciation of the building itself while waiting for the appreciation of the land. If you’re able to find land that is becoming an attractive target for development, then you can profit majorly off of simply buying the land and waiting for someone. Otherwise, you can buy house and land packages in neighbourhoods that are about to grow or are likely to become attractive prospects for new families and young professionals. Even if a property itself isn’t the best investment, it might sometimes be worth buying for the land beneath it, but this means keeping a close ear out for construction and development news.
Becoming a Landlord
Perhaps the most common way of making a profit from part-time real estate is to own a property and then rent it out to tenants. Typically, you might think of this as buying a home or an apartment block (or apartments) that you then rent out to families, young professionals, and others who pay the rent. However, residential rentals aren’t the only market. A business owner might have a better understanding of the needs of commercial entities to also rent out properties in the commercial market. Often, the profits can be larger in this field, but so too can the costs. To that end, you need to be more hands-on to make money in the commercial space, whereas with residential it is easier to leave things in the hands of an agency.
Which of the money-making methods work best for you, as mentioned above, will depend entirely on the nature of the opportunity available. Some properties are better suited to the rental, others are better suited to sale, and others have more potential if you can focus on improving and selling the land.