How to make money investing in real estate?

Buying and owning real estate is considered one of the most sure-fire investment methods in the current day and age. It can be both lucrative and satisfying and unlike stock and bond investments, real estate investments can be bought using leverage whereby you pay a portion of the amount upfront and then pay the rest over time alongside the interest. This ability to control the asset as soon as the transfers are made, even though you’re still paying for it makes real estate worth investing in.

Becoming a Landlord

Becoming a landlord is one of the best ideas for people who are able to manage other people, have infinite patience and are hands-on with DIY or renovation. Before you get started on this stream, you should have a certain substantial capital upfront that will tide you through the maintenance costs and vacant months going along to when the property starts filling with tenants.

The advantages of becoming a landlord are that the tenants will provide you with a regular income and you will be able to maximize your returns especially if you purchased the property on leverage. The property will also appreciate over time and that would leave you with an asset that is more valuable as time passes by.

Real Estate Investment Groups

If you’d like a piece of cake without being directly involved in the baking, so to speak, then you can opt for Real Estate Investment Groups. This is usually a hands-off approach that will still provide you with an income and appreciation. But the bigger these groups are, the more likely your final income is spread across the members resulting in a small sum coming to you. There also might be issues in finding trustworthy groups in this case. Pooling your investments will come with advantages, but there can be quite a lot of disadvantages too.

House Flipping

If you are an old hand at investments in properties, you can take part in real estate trading that is also known as House Flipping. Purchasing an apartment at a high-class venture such as John Keells Properties will bring you many advantages in this case. Depending on the market for apartments in Colombo, Sri Lanka, the rate of return will be swift and twofold. Especially in a market such as Colombo, where property keeps appreciating by the day, this would be the best method to follow. The disadvantages that involve hot markets that may suddenly cool and short-term losses are almost a no-show depending on these kinds of ventures. This is a great option for you if you know the quality of the apartments you are trading are of top-notch and you can guarantee to your customers that they will not be experiencing any sort of deficiency in terms of the apartment.

Real Estate Investment Trusts

If you want portfolio exposure without taking part in the nitty-gritty of traditional real estate transactions, then Real Estate Investment Trusts are the way to go. All you need to begin is investment capital. A corporation or trust will use the investor’s money to operate income properties after purchase. And 90% of profits will have to be paid out as dividends to the investors. Since these are dividend-paying stocks, the advantage will be that you will have a long-term, cash-producing lease which will keep generating the funds for you every month or year. The disadvantage would be that since these are essentially stocks, the leverage position mentioned at the start would technically not apply here. But if you have enough investment capital you don’t have to worry about things like the first few vacant months or costs on maintenance and upkeep.