Real estate constitutes a very smart investment for those who wish to gain a passive income alongside their regular earnings. It's an asset that will always be required. Over time, it may even be possible to make real estate your primary source of making money. However, in order to get to grips with the world of real estate in a gradual and low-risk manner, it's a good idea to start small. In this article, we look at a few of the simpler ways in which you can start to invest in real estate.
Flip a Property
An exceptionally straightforward and popular way of making money through real estate is to flip houses. This involves purchasing a property, renovating and refurbishing it, then selling for a profit. You may choose to flip your current place of residence, or you might decide to purchase a second property to improve. When renovating or refurbishing a property, it's important to stick to a tight budget, as spending too much may result in a significantly reduced profit margin. An intelligent approach is to find a property requiring extensive cosmetic improvement and little to no structural work. This is an affordable way to make a big difference to the property's value. It's important to take a few things into consideration before you decide on this approach.
First of all, you need to think about Stamp Duty Land Tax. If the house or flat in question is going to constitute an additional property when you purchase it, you will probably have to pay SDLT at a higher rate. If you need to take out a mortgage in order to afford the property, you need to make sure that you can afford the repayments. What's more, you'll need to undergo credit checks before your application can be accepted. You can get your funds in order, ensure that your debt is under control or raise the finance for your next big move with a personal loan. It's possible to get matched with a range of suitable options in less than 60 seconds.
Become a Landlord or Airbnb Host
More and more people are profiting from leasing part of their property to tenants - or from purchasing a property and then renting it out. You could even apply for planning permission to build a separate structure on your land to be used for this purpose. You can choose to do this as a landlord or as a short-term rental host using platforms like Airbnb. You must first carefully study the rules and regulations involved - and make sure you fully understand the tax and insurance implications - but this can be a great way to make a sizeable second income.
Join an REIT
REITs are Real Estate Investment Trusts that allow individuals to purchase shares in real estate that generates an income. You can then receive dividends from that real estate. Some REITs rely on blockchain technology and tokenization, whereby the value of a property is divided into tokens, which can be very affordable. Income generated by the real estate is then distributed according to the number and value of the tokens you hold.
