Does it make sense to invest and make money in real estate? Sky- high prices. High rent burgeons. Falling cap rates. Negative cash flows. Government rules becoming stricter. Ongoing talk about real estate bubbles. If you are questioning the sagacity of making money by investing in real estate, you are not alone.
Give it a second thought before drawing a final conclusion. Ask yourself, can you name a more profitable, cost-effective and gainful alternative? Treasury bonds that pay interest of 4 to 5%? Hedge funds? Private equity? Commodities? Saving accounts? Certificates of deposit? I challenge you to run the numbers that will prove superiority of any of these choices.
Earning Profits in real estate:
As an investor, you can make money in real estate from your property by the following eight sources:
- Mortgage payoff
- Value creation
- Instant gain
- Government benefits
- A dependable and growing flow of income
- Value increases
- Strategic management
This article will be discussing on how to invest and make money in real estate from a number of sources.
A dependable and growing flow of income:
Before choosing investment, weigh the amounts of income that investment is likely to yield as compared to other potential investments of other types. Is this flow of income dependable? Will it be growing over the course of time? Will it be offering you the required protection against inflation?
Real estate answers all your questions. It has become trustworthy and dependable to invest and make money in real estate.
Rents will continue to increase:
Although rents may be depressed by short-run economic downturns, but their level will surely go up over the course of time as future demand will increase faster than future supply.
Here are few reasons why rents will be increasing over time and it is reliable to invest and make money in real estate;
- Population growth and household growth: The total population of the world is increasing exponentially and it has created hole in the supply of accommodation and houses. So more the people. More houses they need to live in.
- Second houses: Additionally, the trend of having a second house like farm houses, apartments and flats is increasing day by day.
So, at present or in near future, real estate is a potential source to make income and earn a handsome living.
In the academic world of economic theory, supply increases to meet the demand. For big Macs, long-distance telephone call rates, and airfares, this theory works pretty well. But housing prices are not tamed so easily. In the housing market builder are slowed down by the following four factors:
- High cost of building
- Lack of land for building new houses and apartments.
- Cumbersome regulatory approach of costly and lengthy government permits.
- Requirement of new infrastructure like roads, parks, schools, waste disposal and water system, and recreational areas along with houses.
In combination, these four restrictions have made it uncomplicated and facile to invest and make money in real estate. These restrictions halt new construction. No doubt, some local areas will from time to time produce an excess of “for sale” and “for rent” signs. But in most places, builders will be trying to catch up.
Concluding all this, we learn that the best route to a prosperous future is to invest and make money in real estate.