As the years roll by, real estate is arguably the only property that appreciates considerably with time. While more people are getting increasingly invested in real estate, a lot of others turn away disappointed due to the margins involved. Real estate investments are usually long term investments for the best returns and are generally low-risk investments.
However, it is important to know certain rules surrounding real estate. This ensures that any investment made yields the highest possible returns. Although real estate investments usually require earmarking a reasonable amount of funds, there are a couple of creative ways to make some money off real estate, even if you aren’t currently a landlord.
No. 3 might interest you..
1. Rental Property
This is usually a quicker and cheaper alternative to buying a house. It involves buying a house or a block of flats and leasing it out to tenants for an agreed period of time. During this period, you are responsible for all maintenance costs. It is usually advisable to buy houses in areas with future potential, but which aren’t too populated yet. Houses in highly populated areas tend to be more expensive in procurement and maintenance fees.
When purchasing a rental property, the procurement fee and the maintenance budget are key factors in setting a reasonable rent margin for prospective tenants, which in turn will ensure you get maximum returns on your investment.
2. House Hacking
House hacking involves leasing out a part or whole of your primary residence for an agreed period of time. This is usually useful for individuals who are away from their residence for weeks at a time. Leasing out your apartment can provide some passive income, ultimately reducing housing costs.
Strategic locations like outskirts, airports, and seaports are usually very viable areas for house hacking. These areas usually see a lot of people passing through, who are looking to spend a couple of nights at most.
3. House Flipping
As real estate continues to grow in this part of the world, house flipping is becoming a household term. Flipping involves picking up an old property, renovating it considerably and putting it back on the market at a much higher price. Although it involves a lot of work, house flipping yields very profitable returns when done properly.
As an investor rule, it is usually advised not to pay more than 70% of the ARV (After Repair Value) of a property minus the repairs needed.
4. Building To Specifications
This usually involves building according to set specifications, usually from a prospective home buyer. While it is a capital intensive option, the returns are much more guaranteed.
Many agents and real estate companies in Nigeria are into this. They work with developers to build several types of homes, most of which are in demand and then put it up for sale. Most times, such homes are fully furnished for interested wealthy buyers who do not want to go through the stress of buying home appliances and properties.