Making money from real estate is one of the most popular ways to generate a secondary income. Investing in real estate does not require complex technical know-how like stock trading does. Just about anyone, at almost any age, and from any profession can become a real estate investor. All you need is some starter capital and a willingness to learn about the industry. So, if you are retiree, a home maker or a 9-to-5 office worker interested in making money off of real estate, here are some tips:
Buy Old and Get Tax Deductions
Depending on the jurisdiction the property belongs to, you will be able to obtain tax benefits by calculating depreciation for a certain property. The property has to meet a certain age criteria to quality for these types of tax deductibles. Governments offer these if the material value of the property has gone down due to aging. You should hire a professional to make the calculation. It’s not possible to do it on your own unless you are a quantity surveyor. If done right, you will be able to save thousands or even tens of thousands of dollars each year in deductions.
Rent to Families
The best way to generate an income from your property is to rent it out. However, not all rentals are lucrative. If you can only attract tenants in the short term, you will lose money during the months when the property is vacant between tenants. Therefore, the best option here is to offer long-term contracts. Families, in this regard, are a good target audience. Unlike students and young professionals, families do not like moving out all the time. So, you can expect a family to typically stay at your property for several years to come. You might also be able to expect them to pay on time. However, you must demand a heftier security deposit if you are renting out to families, especially the ones with small children. Kids can mess up a house. Take the necessary precautions by asking for at least a year’s rent as the deposit.
Lease Out to Businesses
Businesses are more highly reliable tenants than individuals. If you can rent or lease your building or land to a business, your returns will be quite high. Business tenants are also willing to pay high rent, as companies can afford them. You can also expect your property to be well taken care of. A business tenant is also not likely to relocate anytime soon. Therefore, you can tailor your rental advertisements to attract start-ups or small companies depending on the size of the property. However, your property will have to be located in a commercial area to be highly attractive. You may also have to expect structural changes to your property as the company makes it ready to do business.
Make Value-Added Improvements
You can instantly raise the value of your property by making useful and simple adjustments. For example, adding a small backyard pool, on-site laundry facilities, a tennis court, or even solar panels can make and otherwise unremarkable property more valuable than the average rate for the area. You can refurbish your property with modern and artistic interiors and rent it out as a luxury property. The resale value will be quite high as well.
Consider the above tips and look for new and innovative ways to make money by investing in real estate.