4 Ways to Build Wealth Through Real Estate Investing

There are many ways of building wealth, real estate is one of the most trusted investment vehicles among billionaires.

According to Forbes, the majority of the billionaires in the world built their wealth through real estate.

This is because real estate generates cash inflows, offers tax breaks, and attracts capital gain over time.

Even though there is a notion that Real estate is only for the rich, it is not true and anyone can do it. You can start with the most affordable like buying a plot and developing it gradually to suit your real estate need like residential property or commercial property.

Below are some of the easiest types of real estate you can consider without so much hurdles.

1. Long term renting out of property

Whenever real estate is mentioned, long-term owning of property pops up. In this kind of investment, one acquires a property that they intend to own for a long period.

Here is what you need to know about this investment type:

  • It earns rental income from tenants every year
  • You have the option to either use it for short term rental or long term rentals
  • You can use debt against the property to increase your purchasing power.
  • Some expenditure on long term rental properties like depreciation attract tax deductions
  • It requires high capital upfront and time of managing the property.

For the successful closing of this kind of deal, an investor is advised to seek assistance from a real estate agent for a smooth transaction.

2. Renting out Property for short term gains

In this type of investment, you invest in properties that you will convert to renting out for short-term periods.

With the rise of Airbnb and Vacasa, online booking for short-term rental properties has grown over the areas.

The most recommended way to enter this kind of market is by converting one of your empty spaces at home to become a renting house. Also, you can rent out your house when on vacation for short-term gains.

It usually needs a lot of effort in preparing the property for the next renters and marketing to get new clients.

The cost is considerably high and has a higher return as well.

If you are buying a property that you can rent out for short-term periods, ensure that you purchase a property within local zoning that restricts the area for short-term rentals.

3. Flipping houses

This is the oldest way and more straightforward kind of real estate investment. It involves buying of a preowned old house, renovate and then sell.

Here are some of the crucial facts you need to know about house flipping:

  • Have the high possibility of making a lot of money within a short period
  • It needs a lot of commitment and efforts

For Higher return from flipping, one should:

  • Do a proper calculation of the cost of renovating
  • Ensure that you complete the renovation within a short period
  • Negotiate well on the initial cost of acquisition of the house

4. Investing in raw Land

Investing in vacant land is perhaps one of the easiest ways of investing in real estate. This is because raw land is relatively cheap and has unlimited room for possibilities.

Investors who take this route need to be good at speculating the future trends of properties in the area so that they can reap the capital gains.

Vacant land can be used for the development of residential property or commercial property. If the land is in rural areas, it can be used for farming.

Investors can buy the plot in a specific area for instance Plots for sale Ngong, Kenya then hold for it to appreciate in market value. In some cases, you can develop the property, subdivide and start selling at a margin

One can invest in vacant land through a real estate company that is selling the properties in the area interested.

In addition, one can use Multiple listing services (MLS) to easily search for land that best suits them.

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