If you’ve just bought or inherited a property, you are probably wondering what is the best way to make money out of it. Managing real estate can be time-consuming, depending on how you’re using it, but it can also grant you incredible passive income.
No matter the case, it is important to find a method that will suit your lifestyle and available time. For example, it is really hard to run an Airbnb accommodation from another city. So, choosing the right strategy can actually have a major impact on your profitability.
Without further ado, here are 5 mind-blowing methods to earn from empty properties.
- Going with a reverse mortgage
Reverse mortgage is a relatively new concept. As the name implies, it is a reverse form of mortgage, where a financial institution pays your mortgage for a certain amount of time (as long as you’re alive or living on the same property). Once you sell or die, the financial obligation is complete.
Although this method seems rather straightforward, there are reverse mortgage pros and cons you need to consider. For example, if you have heirs and you want to leave them with something; you need to consider about the drain of equity a reverse mortgage can take. However, if you’re a senior & struggling for money, this will be an ideal option for reducing expenses and increasing cash holdings.
- Airbnb
Nowadays, it seems that the majority of proprietors are going with Airbnb as their preferred method of making revenues via a property. If we look at it on a daily basis, Airbnb is actually the most profitable approach out of all the ones mentioned on the list. It is as if you’re renting a hotel room.
Unfortunately, this approach has one major flaw, and that is maintenance. Unless you’re living in the same city where the Airbnb property is located, it would be almost impossible to run it. Simply put, you need someone close by to manage the apartment on a daily basis. This is especially true during the peak season and New Year.
If that wasn’t enough, you also need to invest some money in maintenance. To be precise, you will need to hire a person who will clean the apartment after every visit. You can also do it yourself, but this can be quite a tedious, energy-consuming task.
- Long term tenants
The simplest way to make money from a property is to get tenants. This is a type of plug-and-play management where you just sign a one-year contract and don’t have to think about leasing for at least that long. What’s even better, most tenants tend to stay in the same house or apartment for several years, so your only task will be to pick up cash once a month.
Another great thing about long-term leasing is that these tenants are less likely to cause a mess. Given that they’ll live in the same house for a long period of time, it isn’t in their best interest to make a mess. Unlike Airbnb, where you can expect just about anything, with long-term renting, your home will be kept in good shape.
- Flipping houses
Flipping houses is a concept tailor-made for realtors and contractors. Basically, if you have any experience within the industry and some free cash, you can make great money from this approach.
The thing with flipping houses is that you can’t buy just about anything. You need to find a house that is completely ruined. In fact, the more damage to the house, the bigger the potential profit. It is also much better to find properties in nice residential areas. That way, when you finish fixing it, you can make a bunch of money.
As mentioned, this approach is especially great for people who have experience within the industry. If you’re a realtor, you can easily find properties that are underpriced. You will also know when the best time to hit the market is. Contractors can do the repairs themselves saving lots of money in the process.
- Short-term purchases
Lastly, we have short-term purchases. In this particular case, you’re trying to make money off of price fluctuation. For example, if you’re predicting that the market will go up, you can buy a few homes now and sell them at a profit in a year or two from now. Until then, you can simply lease the apartment or make money out of it in some other way.
If you’re close to retirement, you can even look at these purchases as a great retirement investment.
