Real estate can be used as one of the best ways to make money and build wealth. Here we tell you how:
When you buy a stock, the only way you can make money is if the stock appreciates in value, and you sell it at a good time. With real estate, you can make money in many ways. Read On.
- Rental Income. This is one thing profit investors look at while investing in real estate. This real estate advantage is as easy to understand as simple interest (SI).
- Buying Low. You make an instant profit if you manage purchase a property for under market value, probably in the volatile market or when the market is depressed. Foreclosures or buying a mortgaged property can be purchased low.
- Selling High. You can make money by retouching the property to attract buyers over market value. With stocks, you always buy and sell at market value. With real estate, you can try to beat the market.
- Increasing Equity. If you take a mortgage to finance a rental, you are increasing your equity with every mortgage payment. If you put down your rental for mortgage payments more than usual rentals, you will ultimately increase your net worth every month.
- Leverage Increases Returns. If you put 20-30% down on a property, you will still receive rental income based on 100% of the property value, making it a great return for your 20%.
- Leverage Makes You Profit on the Full Selling Price. If that same INR 50,00,000 property you bought with INR 10,00,000 down payment and you sell it for INR 55,00,000 a few years later, you get your INR 10,00,000 as principal payment and INR 5,00,000 profit. It is only a 10% profit over the full value of the property, but thanks to your leverage, you are making a profit of 50%.
- Renting Smaller Units of Home. Rent three rooms by the room, to three tenants. You can charge more than if one family was renting the whole place. You can divide your family house into a duplex or a triplex and increase the rent.
- Renting to Small Businesses. Businesses have a different type of tenure and rents are higher. They are also safer if you choose a well-known business to rent to.
- Tax Benefits on Interest. Depending on your country of residence, you can often deduce the mortgage interest from the rental income, and create a tax-free profit.
- Tax Benefits on Home Improvements. You can also deduce the cost of the improvements from the rental income, while the added value to the property is yours to keep.
That’s how you make money from real estate; there are more tricks to it which brings you profits. Subscribe to blogs for more tips.
Information and image source: Internet