Making money doesn’t have to be restrained to your 9-5. There are many ways to earn extra income, including investing in real estate. There are several types of property investors.
Some buy and hold their properties for monthly cash flow and accumulated wealth. Some buy, improve, and resell. They make an immediate profit but they also take on more risk. And others are just starting out and trying to better understand the industry. They usually stary by renting out space in their homes to supplement their income or financially prepare to purchase their first few investment properties.
Let’s look at a brief overview of each.
empty rooms = extra income
A smart and simple way to earn extra cash is to rent out a spare room in your home. Many property investors buy homes just to host temporary tenants using websites like innclusive.com and airbnb.com. This emerging industry, can be very lucrative.
In some cases, they are able to make more income with short temporary stays than they would with the one-long-term-tenant-at-a-time strategy. In addition, you don’t have to deal with long-term leases with unsavory renters and potential evictions. But for this strategy to work well location, decor, and the uniqueness of the property are key.
Q. What if you don’t yet own an investment property?
A. Use your current home as a way to make extra money and prepare to invest in real estate. Here are 2 strategies to consider.
If you’re looking to ease your personal financial burden, consider getting a roommate. In most cases splitting all of your living expenses in half will help you save more aggressively or even substantially pay down debt. If you want to buy an investment property in the future, this might be the solution to saving for the down payment and improving your credit through debt reduction.
If you want to earn extra income but you don’t want the long-term commitment of a full-time roommate, consider renting your extra bedroom, in-law suite, or basement on a site like innclusive.com or airbnb.com. You’ll earn with each stay and if you’re able to price your space just right, you’ll be able to make in a few days what you would have earned with a roommate.
buy and hold
I’ve heard women often say that they don’t want to be a landlord. But the truth is that owning and renting your investment property is the best way to maximize your returns… all the way around. From earning monthly cash flow, having the tenants pay off the mortgage debt, reaping the tax benefits, and enjoying wealth accumulation through the property value appreciating over time – if you can handle it, buying and holding property is a solid way to build wealth.
There are a few barriers to entry.
You’ll need to able to be approved for an investor mortgage loan. Having solid credit, strong savings and consistent income is the recipe for getting the best investor loan terms (interest rate, down payment amount… etc.). It’s also important that you have a good understanding of the real estate market and areas that are popular with potential renters – as well as future buyers. Do your research on becoming a first-time landlord. Then, take a look at homes, townhomes, condos, and apartments for sale in your local area.
redevelopment and revitalization
If you get excited when you watch property flippers on HGTV, becoming a property developer might be a perfect fit for you. Much like buying and holding, you’ll need strong financials or access to alternative financing or cash to purchase the property and make the necessary repairs and improvements needed to create a highly sought after home. It’s also important to have – or know someone that has – a strong sense of design aesthetic. The goal is to take a diamond in the rough and make it someone’s dream home. They buy the property from you at the improved property price and you walk away with (potential) sizeable profits. Then, it’s on to the next property.
If you are considering any of these investment options be assured that there is good money to be made. Start small. Purchase your first property or use your current home to start generating income and start moving in the right direction. Learn the industry and then start building your real estate portfolio.