Earn Well from Your Property – Play Your Cards Wisely
For those of us with a remote understanding of investment in real estate, one thing is very clear – there will be steady appreciation over the years and it is a rock solid investment.Based on these two facts, you may be under the impression that property will get you instant returns. Unrealistic expectations are a common mistake made by most investors. Real estate, just like any other asset form has its ups and downs. You have to make certain smart decisions to make the investment work well for you.Here are a few common mistakes committed by novice real estate investors
Not understanding the market
If you are looking to invest in real estate purely to sell or to earn rentals, then you should have a clear understanding of the market. Look for places where the demand lies and see if you can find a property to leverage this demand.
Being unrealistic
What many real estate investors fail to understand is that real estate is not an overnight money spinner. If you are renting out the space, your gains will increase over the years, with the annual increase in rents. You will also earn interest on capital based on the deposit amount with you.As far as sales go, a home will not show you a substantial appreciation for at least 5 years after it is bought. If you are looking for instant high returns, then banking solely on real estate may not be the way to go.Now if you have investment in residential real estate, here are a few ways to earn on your investment:
1.Rentals
Of course renting out your home will be the first means of earning from real estate. Be sure to have competitive prices that are in keeping in the prevalent rates in the locality. Also keep in mind the rentals will vary based on location and proximity to amenities. You may use the rent to pay your home loan EMIs each month or avail of the 5% to 6% returns you get on it, each year, exclusive of taxes.
2.Leases
You may consider a company or an individual lease. Handing over your property to a corporate is a good way of ensuring a fixed income and having your space looked after by responsible entities. The paperwork is always in order as are all legal requirements. You may also consider the same with an individual tenant. It ensures that you have a long term tenant and are prepared to look for another when the time comes.
3.Short term guest house
If you plan to use the house on occasion, then you may consider renting it out as a guest house, perhaps with domestic help included, to short term tourists. Alternately, you may also consider the popular option of running a paying guest establishment.
4.Service apartment
If you plan to use the house on occasion, then you may consider renting it out as a guest house, perhaps with domestic help included, to short term tourists. Alternately, you may also consider the popular option of running a paying guest establishment.
There are several ways to earn a profit from your real estate asset. The key is to remain realistic about your expectations and give your asset time to grow and appreciate in value. Diversifying your investment portfolio into other assets helps.
Main take-aways
- Unrealistic expectations and a lack of understanding of the market are common mistake of a novice real estate investor.
- Besides rentals, there are several other ways to generate an income from your property.
- Diversifying your investment portfolio and giving your asset time to flourish is what will work to your benefit.