Does it make sense to invest and make money in real estate? Sky-
high prices. High rent burgeons. Falling cap rates. Negative cash flows. Government
rules becoming stricter. Ongoing talk about real estate bubbles. If you are questioning
the sagacity of making money by investing in real estate, you are not alone.
Give it a second thought before drawing a final conclusion. Ask yourself, can you name a more profitable, cost-effective and gainful alternative? Treasury bonds that pay interest of 4 to 5%? Hedge funds? Private equity? Commodities? Saving accounts? Certificates of deposit? I challenge you to run the numbers that will prove superiority of any of these choices.
Earning Profits in real estate:
As an investor, you can make money in real estate from your
property by the following eight sources:
- Mortgage payoff
- Value creation
- Instant gain
- Government benefits
- A dependable and growing
flow of income
- Value increases
- Strategic management
This article will be discussing on how to invest and make money in real estate from a number of sources.
A dependable and growing flow of
Before choosing investment, weigh the amounts of income that
investment is likely to yield as compared to other potential investments of
other types. Is this flow of income dependable? Will it be growing over the
course of time? Will it be offering you the required protection against
Real estate answers all your questions. It has become trustworthy and dependable to invest and make money in real estate.
Rents will continue to increase:
Although rents may be depressed by short-run economic downturns, but their level will surely go up over the course of time as future demand will increase faster than future supply.
Here are few reasons why rents will be increasing over time
and it is reliable to invest and make money in real estate;
- Population growth and
household growth: The total population of the world is increasing exponentially
and it has created hole in the supply of accommodation and houses. So more the
people. More houses they need to live in.
- Second houses: Additionally,
the trend of having a second house like farm houses, apartments and flats is
increasing day by day.
So, at present or in near future, real estate is a potential source to make income and earn a handsome living.
In the academic world of economic
theory, supply increases to meet the demand. For big Macs, long-distance
telephone call rates, and airfares, this theory works pretty well. But housing
prices are not tamed so easily. In the housing market builder are slowed down
by the following four factors:
- High cost of building
- Lack of land for building
new houses and apartments.
- Cumbersome regulatory
approach of costly and lengthy government permits.
- Requirement of new
infrastructure like roads, parks, schools, waste disposal and water system, and
recreational areas along with houses.
In combination, these four
restrictions have made it uncomplicated and facile to invest and make money in
real estate. These restrictions halt new construction. No doubt, some local
areas will from time to time produce an excess of “for sale” and “for rent”
signs. But in most places, builders will be trying to catch up.
Concluding all this, we learn that the best route to a prosperous
future is to invest and make money in real estate.