How to make money investing in real estate
You can get real estate money in two different ways: the estimated value of the property over time and cash flow from rental income. We will destroy everything. But before we jump in, I want to make something clear: You have to pay investment property with 100% money. Don't even think about borrowing real estate, man! A 100% down payment removes debt from the equation, lowers your risk and prepares you to make more money early.
Estimated value
Apart from the ups and downs of the real estate market, most real estate values increase in the long run. A fantastic word for investing in value improvement is appreciation. And the key to buying property that they value is location. You want to buy in a part of the city that is in an upward trend as a value.
Buy cheaply too and overcome all market downturns until your property is valued. With a fully funded emergency fund (living expenses and repairs of three to six months), you can wait for the right time to sell. When something unexpected happens, you have the money to cover it without learning about your other investments.
rental income
Being aware of rental income is the main reason why investors buy real estate.2 Once you get a tenant, owning and renting property is a great way to generate additional income with little effort.
Besides the need to have cash to cover repairs or maintenance, your part is quite far. There is even less for you when you hire a real estate management company, but it gives you an advantage. Regardless, you get money just by owning property.
However, please be aware that dealing with tenants can be frustrating and time consuming. Do your homework before letting someone rent your property. They want to make sure they keep it in very good condition. And always have a written rent. I hope that never happens, but you might even have to hire a lawyer if you need to identify tenants who have problems or lose rent. Costs accumulate quickly, so make sure you have an emergency fund to win.
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