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Real Estate: How to make money
Real estate is one of the safest ways to make passive income. Even though the recent economic downturn has dropped house prices and attributed to fewer buyers, there are still plenty of ways to make money in this very lucrative market.
1. Renovate and resell. This can be quite expensive and as we all know sometimes house prices fall. Most of the time however this is a perfectly good way to make passive income if you don't mind moving around.
- Find a good house with renovation potential. Move into the house as your primary residence knowing that you are going to live here for a while.
- Renovate problem areas and areas of highest potential. They say that kitchens and bathrooms pay back nearly double what you put in. Converting large bedrooms into two can be good. Follow renovation trends such as open concept, colors, etc.
- Sell home and start again.
The key to this when starting out is that you always need a place to live so living in your new home and not having two mortgages really saves money. As well, because it's your principal residence, you would not pay Capital Gains Tax on the increase in value.
2. Convert to double family home. Secondary suites are very often a great idea. If the home is based in a desirable location for renters it will likely make much more money as a double family home. Live in the home while it is being converted and rent out the other portion. Living in a suited home is much more akin to apartment living and requires some getting used to, but the passive income generated can often pay for all or most of the home's mortgage. When you go to sell the home it can now be sold as an investment and will likely fetch a higher price.
3 Room-mates. If you don't have the start up capital required for renovations, getting room-mates can really help with passive income while you grow your savings. In some instances having two room-mates home owners can make more money than with a secondary suite.
We all need food water and shelter to survive. The ultimate goal here is to make the "Shelter" part FREE. We pay so much in rent, mortgage interest, etc. If you use one or more of the above then likely over time you will find that you will not be paying for your shelter, and in many instances be making money from it without interfering with your full time job.
Are there any other great ways to make money from Real Estate? Add them to the comments below!