Profit is the best known measure of success for most businesses. It is the benefit realized after tax and dividend are paid and total cost is deducted from total revenue. Earnings matter, after all, people who invest in real estate, do so to make money.
Profit is realized in different ways when it comes to the real estate industry. Here are three different ways explained:
Rentals are one of the fastest ways profit is realized in the business. Often, a house may sit on the market for months or years without getting sold, but there is always a market for renters. Also, over time, the amount of rent a property may bring in may exceed its actual market value.
#2. Fix and flip
Buying run down properties, fixing them and selling them for much higher is a real estate strategy known as fixing and flipping. This is usually a smart way to make healthy profits in the business, but you will need a keen eye for properties with good potential.
#3. Buy in recessions
Recessions create a buyer’s market, as people are not usually willing to spend money on homes. Home prices will usually crash during such periods, but smart investors know that they are almost certain to rise again. Investing during a recession, with a view to cashing in on a forecast expansion, is another smart real estate investment strategy.