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Property investment has long been among the most popular of all possible ways to build wealth. It’s renowned for traditionally being one of the least volatile while also tracking upward over time. Property investors can also enjoy being able to leverage their existing real estate investments to buy even more, further growing their property portfolios.
It sounds simple, and, for many investors, it is. However, if you need a helping hand building your own wealth through property investments, start with the following advice:
Consider Commercial Real Estate
Whether you explore commercial real estate for sale in Melbourne, New York, or anywhere else, you’ll be surprised by how many lucrative benefits there are associated with it. You can enjoy tax benefits with substantial depreciation allowances, leverage your property to invest in other ventures, and enjoy longer lease terms for more stable income over a longer period.
While you might spend more to own a commercial property, you can enjoy lucrative rental returns while ensuring your tenants have a comfortable and sound building to run their businesses from.
Explore Residential Real Estate
Rental property investment is one of the most conventional ways to build wealth in real estate. You can enjoy steady cash flow and a lucrative cash-on-cash return of around 10.6% as of 2023.
As a rental property owner, you can also choose to be hands-on or hands-off. You may take care of your tenants’ needs yourself or outsource this job to a rental agency to manage on your behalf.
However, not all residential properties for sale are guaranteed to be ‘good’ investments. Explore areas with low property taxes, good school districts, and desirable amenities.
Try Flipping Properties
Not everyone wants the hassle of tenants. Even though you can outsource commercial and residential property management to experts, you still have to ensure their needs are met. You might explore house flipping if you still want to make money in real estate without directly dealing with people.
House flipping involves buying a property that needs a little love, renovating it, and selling it at a profit. If you have DIY skills or know people who do, this might be a viable money-making avenue for you. While the market has cooled slightly in some parts of the United States, the typical gross profit on home flips was around $68,000 in 2022.
Inquire About Real Estate Investment Trusts (REITs)
Real estate investments can be lucrative, but they don’t always have to involve owning tangible property. You can also make money by investing in real estate investment trusts (REITs).
REITs are companies that focus on owning and managing real estate that produces income. You simply purchase shares in a company through a broker and enjoy annual returns. Interestingly, the returns on a percentage basis can be pretty similar to owning tangible properties, averaging around 10% annually.
Research Land Development
While certainly more time and labor-intensive than other property investment options, not to mention more expensive up front, land development can be a viable option for many eager investors.
This involves purchasing raw land and obtaining all permits to develop it before selling it to commercial developers or homebuilders. When you understand planning regulations, zoning laws, and market conditions, it can be a viable and profitable option worth exploring.
There are certainly many ways to build wealth, but property investment is among the most popular and lucrative. If you’ve been thinking about maximizing your wealth and enhancing your portfolio, some of these real estate options above may be worth exploring further.
