If you have money to invest and you aren’t sure where the best place is to invest in, the most common answer that you are likely to receive is that you should put your money in real estate. This is of course not to say that this is always the best option for investment but for many it is a great way of investing their cash. The real estate market doesn’t move in the spontaneous way that say the FOREX market may move in and for many people it can provide a low risk investment which can provide big returns. So how do people make money from real estate? We spoke to expert Tyler Tysdal to find out how.
The most common practice for people buying real estate is that they will invest when the market is on the lower side and they will look to recoup the money that they have invested by renting out the property. This provides both liquid cash coins in each month and it gives the owner an opportunity to sell up should the market improve and the property rises in value. This is a long term strategy of course and it makes for a smart addition to your portfolio.
Another way that real estate investors like to make money is to buy a property which is in serious need of updating, they will purchase the property for a very low price, invest money into updating and modernizing the property and then sell the property quickly for a small return. The way in which people make money doing this is by flipping numerous houses throughout the course of a year, sometimes simultaneously. Most people that conduct this type of investment have contractors who are loyal and will immediately begin work on the property as soon as the hammer has fallen on the sale.
Private Equity Groups
Private equity groups began more or less in the early 90s when property prices were low and groups of investors pooled their funds together in order to scoop up large volumes of properties. The way in which these groups work is that they pool investments from a group of companies, families or individuals which they will then use to invest in large amounts of real estate or highly valuable real estate. The investors will receive a small return each year over a long period of time. Often investors can expect around 6-8$ returns on their investment but it is worth remembering that investors may not see returns for the first 5 or 10 years after their initial investment of capital. After this initial waiting period however investors can make large gains when assets are liquidated and it is a slow burning strategy which pays itself off time and again over the long haul.
The choice as to how you invest in real estate is yours but investing is certainly a smart idea.