Real estate investing is one of the earliest forms of investing. It has been around since the oldest days of human civilization. It is known as one of the basic asset classes that date back way before modern stock markets entered the investment scene.
It is also a form of investment that every investor should seriously consider as an addition to his/her portfolio for the unique cash flow, profitability, tax advantages, liquidity, and diversification benefits.
There Are Four Ways to Make Money Out of a Real Estate Investment
Real Estate Appreciation
Real estate appreciation happens when the property or investment increases in value due to several factors. One factor may be due to the sudden changes in the real estate market that influences the demand for property within your area.
It may also be due to the upgrades and improvements that you implement into your property investment which makes it more enticing and desirable among potential buyers or tenants.
Cash Flow Income from Rent
This type of investment is geared towards buying a property such as an apartment, commercial space, or building and then managing it in such a way that you can collect a steady stream of cash flow from the rent.
Cash flow income may be generated from properties that can be marketed for business or commercial purposes, as room and office for rent, house rentals, and transient/vacation homes.
Becoming a Realtor
This income is usually generated by brokers and real estate professionals who make money by collecting commissions from buying and selling a property.
It also encompasses the field of real estate management wherein the investor can keep a percentage of rents in exchange for running the daily operations of a property.
Ancillary Investment Income
For some real estate investors, finding a way to generate other streams of income from their investment becomes highly feasible. This can actually serve as a source of additional profit.
Ancillary real estate investment income can come from the installation of vending machines in office buildings, paid laundry facilities in residential buildings, paid to park, and other forms of small businesses within a bigger real estate investment.
This allows the investor to generate additional sources of income aside from the rent.