Residential Properties
Sinking your money into investment properties can also prove lucrative, though it does require some work. First you buy a residential property, either a single-family or multifamily building, and purchase it, usually financing this purchase with a mortgage loan
You can then either live in the property or rent it out as you wait for it to appreciate in value. If you rent out the property, you might be able to use these monthly checks to cover all or part of your monthly mortgage payment. Once the property has appreciated enough in value, you can sell it for a big payday.
The challenge, of course, is that the property you purchase isn’t guaranteed to increase in value. You can lower the odds of a bad investment by researching local neighborhoods to find those in which home values tend to rise. You should also work with real estate agents and other professionals who can you show historic appreciation numbers for the communities you are targeting.
You will have to be mindful of location. A home on a busy street might be more affordable but might not appreciate as quickly as one located on a quiet side street. An apartment building located next to public transportation might see a quicker jump in value than one located miles away from the nearest commuter train station. If you don’t want to take phone calls late at night from tenants complaining about furnaces that aren’t working or roofs that are leaking, you’ll have to pay a property management service. These services handle the daily work of maintaining and operating properties. They’ll also send repair technicians to properties that need emergency maintenance.
Commercial Properties
You can earn money by buying and investing in commercial properties much the same way you do by investing in residential real estate: First you buy your property. Then you charge monthly rents to tenants. If the property’s value rises, you can sell the commercial space for a hefty profit.
There are many types of commercial properties in which you can invest. You can purchase an office building and charge companies to rent space in that building. You can purchase strip centers or other retail properties and charge monthly rent to business owners. You can even purchase a warehouse and charge rent to manufacturing companies or retailers who need to store their products. The risks are the same as they are when investing in residential real estate: There is never a guarantee that your commercial properties will increase in value, which is why researching the properties and the communities in which they sit is so important. You might also struggle to find enough tenants to fill that office building or retail center you purchased.
House Flipping
In the past decade there have been several shows on cable networks that highlight the opportunity to be a “real estate flipping guru”. Investors who want to make money quickly often turn to house flipping to enhance their financial lifestyle. This is when you purchase a home for a lower price, renovate it quickly and then sell it for a fast profit. The key, of course, is to buy the right home. You’re not interested in monthly rents when flipping a home. Instead, you need to purchase a home for the lowest possible price if you want to make a good profit when selling.
Again, research is key. You want to find a home in an attractive neighborhood, one that attracts plenty of buyers. And you need to make sure the repairs required for the home aren’t so costly that they’ll swallow any potential profit. If you’re handy enough to handle renovations on your own, you’ll greatly improve your chances of making solid profits through house flipping.
"You have plenty of options when it comes to investing in real estate."