One of the best ways almost anyone can generate additional income is by investing in real estate. Many people, however, don’t know how to get started. As attractive as real estate can be, it can also be intimidating.
While it’s always a good idea to approach investments with caution, the truth is that real estate is much more accessible than you might expect. Here are some helpful tips to get you, ahem, invested.
Start Small by Renting Out a Spare Room
For anyone whose interest in real estate is strictly tentative or small-scale, one great way to dip your toe into things is to rent out property you already own, instead of going through all the steps to buy a house specifically for leasing. If you own your home, consider converting any unused space, such as the attic or basement, into a small apartment.
Although this process is not without its own costs—this can include anything from adding a separate entrance to installing new plumbing and electrical work—it’s considerably less expensive than investing in a whole new property. If it turns out you like the experience and find it profitable to continue, then you might be ready for something more long-term.
Buy Properties for Long-Term Renting
The next step up involves buying properties for the specific intention of renting them out. You can buy a house and then rent it out as one large unit, or convert it into multiple apartments in order to maximize your investment while also appealing to renters looking for more modest accommodations.
At higher levels of investment, buying property for long-term leasing purposes may include not just residential, but also commercial real estate. The scope—and profit—of renting out commercial space to one or more businesses is significantly greater, but the principal is essentially the same. Conversely, a good middle ground between small-scale and long-term investments can be offering seasonal vacation rentals, which require maintenance and fewer risks.
Renovate and Resell Old Fixer-Uppers
Renting isn’t the only way to make money on real estate. For those more interested in faster, larger financial turnarounds and less interested in long-term investment, real estate flipping may be an attractive option. Flipping involves buying low-cost properties then reselling them later at a higher price.Sometimes this can be accomplished by careful observation of market fluctuations, but more often it is done by purchasing fixer-upper houses and then investing even more money into renovating them. Although this can seem like an expensive proposition, many flippers are able to increase the value of a home to the point where they can sell it for more than both the original cost and the expense of repairs.