“Investing in property” doesn’t just mean one thing. Read on to learn about the three most common ways people make money with real estate.
Buy to Live and Sell
The most common way to invest in real estate is to buy a property that you will live in yourself. This is technically an investment because you will be able to sell the property once you no longer need or want to live in it, thus all the money you’ve put into the mortgage will be returned from you, and then some if the property appreciates. Property and land tends to appreciate naturally as things develop around it, so when you own the property you live in you can sell it back for more than what you bought it for. This profit you make will be your return on investment.
This is also an investment for those who don’t want to rent, as a common attitude towards rental properties is that the tenant has nothing to show for all the money that he or she spent on it when it comes time to move. That rental money will never be returned to you but will instead go to your landlord.
Which takes us to the next type of investment:
Buy to Collect Rent
A more efficient way to make a return on your investment is to buy a property that you can then rent out to someone else. This will mean that you live in a different property and someone else lives in the investment property. It is an investment because, similar to the first type, you can sell the property for a higher price than what you bought it for due to the appreciation of the land beneath it. At the same time, you can collect rental income that is higher than the mortgage, meaning that you will receive extra money each month simply for owning the property.
This is a faster and more efficient way to make a bigger return than living in the property yourself. But there are even bigger ways to make a return. Which leads us to our next type of investment:
Buy to Flip and Sell
The fastest way to make a return on your investment is to buy a property that will quickly sell for much more than what you bought it for. One way to do this is to invest in a fixer-upper property in a good area. Location is everything when it comes to selling property, but not everyone has the time of means to buy in a great location and also spend on renovation. If you can afford it, trust that your return will be fast and powerful.
Honourable Mention: This option requires significant upfront capital, however buying in bulk is a great way to make a bigger return. You can often strike great deals with developers who are eager to get their properties sold, which gives you as the investor a great advantage when it comes time to sell the properties. If you get a great deal on a large number of properties, you can then sell them around for market price and make major returns. Combine these methods by buying a whole floor of a condominium building, then live in one while you rent out the others and sell when the land beneath the condo appreciates. Then, “Bingo,” you’ve got a major ROI.
