It doesn’t matter if you are curious about real estate and its investment potential, or if you are just really tired of those infomercials that promise untold amounts of money in return for a newfangled way to invest in real estate. It really can be worth your while to see how money can be generated by using real estate.
Did you know that your average mortgage loan officer makes about 2% on each home mortgage that he closes? This is a rate that is mostly standard throughout the industry because of regulations set forth in 2011 by the Federal Reserve Board. That means that if you close a mortgage of $250,000, your earnings will be $5,000. This is an excellent way to make money in real estate while not having to invest in it personally. Also, mortgage loan officers have a schedule that is flexible and are doing something that matters by helping people realize their dream of owning a home.
Another good way to make money through real estate is by having rental properties. You might invest in single family homes, duplex, triplexes, or quads, small apartments, or even office or warehouse space. Any of these options will give you easy purchase and financing options while serving as solid investments and can even serve as spaces for your personal use if necessary.
One of the ways that real estate can be a great way to make money is through tax benefits. Depending on which country you live in, many times you will be able to deduct the interest of the mortgage from your income from rental and this creates a profit for you that is tax-free. Another way to get a tax benefit from rental property is by deducting the cost of improvements to the rental property from the income from the rental. You get the deduction as well as the extra value the improvements added to the property.
Wholesale Real Estate
Most of the time, when people hear about real estate investing, they think about buying and renting property or flipping real estate. In reality, there are quite a few different strategies out there for investing in real estate. Some of them don’t even involve tracking down rental payments or making any sort of renovations to the property in question. They key to this is knowing exactly which strategy to use at which times. For people just starting out with real estate investing, real estate wholesaling might be a good option. There is almost no risk in this, too. You don’t need a real estate license and you don’t even need to use any money of your own to do this. Profits on sales like this might rarely go over $40,000 per sale, but you will be able to work on quite a few of them at once and often, these take less than a month to close.
The single most common source of profits in real estate is in appreciation. This is the increase in the value of a property. For different kinds of real estate, this is achieved in a variety of ways. However, it is important to know that this appreciation is only ever realized when the property is either refinanced or sold.
MICs and REITs
If you are unfamiliar with these anagrams, they stand for Mortgage Investment corporations and Real Estate Investment Trusts respectively. These are typically thought of as being fantastic ways to get income from real estate. While this can be true, it is only in the sense that the underlying security is the real estate itself. With REITs, a person who owns many commercial properties will sell shares to his investors. This is usually done in an effort to fund the purchasing of more property. Then, the rental from these properties is passed to the investors. The REIT is actually the landlord for any tenants, but the people who are the owners get the income after the expenses from the REIT and running the properties are taken out.
MICs invest in private mortgages as opposed to any sort of underlying property. They hold the whole mortgage and pass on any interest from the payments to their investors, as opposed to any interest streams that are independent of the mortgage.
Any and all of these ways are excellent when it comes to generating income from real estate.