When you hear the word investment, real estate can often be one of the first things that comes to mind. That’s because property presents so many opportunities to make money. In this article, we’ve highlighted four ways in which residential property can drive serious financial returns.
Property Flipping
Perhaps the most obvious way to make money through residential property is by “flipping” properties. If you’re unaware of flipping, the strategy simply involves buying an undervalued property and selling it for more. In most cases, this involves some form of renovation process between buying and selling to increase the value.
To start with, the buyer would need to obtain an official valuation for the property in question. This could come in the form of a RICS desktop valuation initially to save you time. The next step would be to identify ways to add value to the property, and this is why finding undervalued property is so important. Old properties with outdated interiors are easier to add value to when compared with a new build property that is in pristine condition.
Local knowledge can become invaluable when flipping property. This allows you to identify opportunities that others are incapable of spotting. For example, if construction work on a new train station is about to commence in a certain area, this could drive up the value of property in this location over the next few years.
The barrier to most people is cost. Flipping properties requires a large initial injection of capital that allows you to own the property in the first place before renovating.
HMO
HMO stands for a house in multiple occupation, and simply refers to multiple individuals sharing the occupation of a property. In most cases, individuals will have a room in the house to themselves whilst sharing communal areas such as the kitchen or bathroom.
While HMOs are designed to provide cheaper housing solutions, they also provide opportunities to make money. Turning a traditional home into a HMO opens the door to multiple sources of rental income. For example, a property designed for two people may have six rooms, but you could increase rental yield significantly by transforming this into a four-bedroom house for four occupants.
A HMO comes with the same barriers as property flipping, as you’ll need funds to own a property and carry out any needed renovations. It’s also worth considering that a HMO can come with more management stresses as you’ll have an increased number of tenants.
Airbnb
One of the more modern techniques to make money through property is to focus on Airbnb rentals. Airbnb offers short-term opportunities to rent out your property, which has become a modern-day competitor to hotels.
The beauty of this is that you don’t need to buy an additional property to make money through Airbnb rentals. It could be as simple as renting out your property while you are on holiday or on weekends when you are not at home to open up an additional income stream.
Property management
If owning property isn’t within your reach, there are other ways to make money in the property sector. Property management is arguably the most common way to make money through real estate without actually owning the property.
This involves managing properties on behalf of landlords, attending to tenants’ needs and charging a monthly management fee. Tasks may vary from one landlord to the next but most property managers are involved with collecting payments, organising maintenance and finding new tenants when a property is empty.
From property management in Miami to Manchester, this is also one of the most scalable businesses.
