You always hear of people who made their money using property and think you wish you could have done that – starting a few years earlier.
Well, the good news is that it is not too late. Not yet!
All you have to do is empower yourself with the right knowledge, take the responsibility to learn, and then “just do it”.
Sounds impossible? Or too difficult?
The answer is no – it is very possible and very easy, once you know what to do.
Here is a quick summary of some of the different ways you can make money using property.
We are all different and therefore it is best that you find a way to invest that is best suited to your personality. Not all of us want to become the next Donald Trump, but most of us are prepared to put in the time and effort to learn how to do it.
Start here – make sure you always do the research and double-check the numbers.
The only way to do that and get the guaranteed results that you want is to learn what to do, and the secret is the growth on your money that you invest into a property, not the property itself!
This can be done with a program like the Property Pro Investment Program™. Without this it will be impossible to calculate the growth on your investment in property.
Make sure that you understand the risk that is associated with each method and property in general before you decide to start making money from property.
Also make sure that you know how long you want to invest and what your exit strategy is going to be.
Here are 18 different ways to make money from property:
Buy-To-Let is a British phrase referring to the purchase of a property specifically to rent (let) it out.
A buy-to-let mortgage (bond) is specifically designed for this purpose.
This method involves buying a property (using other people’s money, i.e. the bank) with the express purpose of renting it out and eventually making a profit from the rental.
- Rent-To-Own (aka Lease To Own)
A lease-to-own property purchase (also “rent-to-own purchase” or “lease purchase” or “lease to purchase option”) is a lease combined with an option to purchase the property within a specified period.
The lease regulates how the rental will work out for a set period.
After that period, the buyer has the option to purchase the home.
A portion of the rent is usually set aside in a rent-to-own contract as part of the down payment needed to buy the home.
Very similar to buy-to-let: this method involves renting a property cheaply in order to rent it out for a profit.
It is important to ensure that your lease allows for sub-letting before you consider a property for this purpose.
- Property Development
A property developer is a professional in the sector of property development.
Some of the responsibilities of a property developer include purchasing land for new buildings, signing leases for existing properties, improving and renovating existing buildings and selling properties.
To become a property developer, an individual should have a good knowledge of the local real estate market and a good head for figures.
- Property Speculation (aka flipping)
A type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit.
Profit is generated either through the price appreciation that occurs as a result of a hot housing market and/or from renovations and capital improvements.
Investors who employ these strategies face the risk of price depreciation in bad housing markets.
Investors can execute this investment strategy in several ways. For example, investors that prefer a short-term approach might buy several properties with mortgages and then hold them for only three or four months in the hope that their value will increase. Conversely, an investor can take a longer-term approach by buying a single, moderately priced property and renovating it to “flip” it for a profit.
- Renovate to Sell
To renovate a property in order to sell it simply means you buy a dilapidated house with a lot of potential, fix it up and sell it at a profit.
A good example of renovating a house for this purpose, is when you buy a falling-down old house and install new wiring, plumbing and fix all the problems so the house is as good as new.
- Renovate to Rent
The same as renovate to sell, but your intent is to keep it and get more income from the property than the cost of the renovation.
- Repossessed property aka PIP’s (Property in Posession)
Should the owner of a property fail to make the repayments, the bank will eventually repossess the property.
Attorneys take legal action and a High Court judgment is obtained against the defaulter. The property is attached and the sheriff sells it at a sale in execution.
If the bank’s reserve price can’t be achieved at the auction, the property is bought into possession, meaning the bank now owns the property.
When you focus on buying PIP’s from banks, it is important to negotiate with them to get the property at below market value in order to quickly re-sell at market value or even below market value so that you are in a position to make a substantial profit.
- Investment Consortiums
Investment consortiums allow its members to combine their available funds in order to purchase investments that they would not be able to afford or qualify for independently.
Make sure to choose an investment consortium that suits your individual property strategy such as buy-to-let or property development etc.
- Property Syndication
Property syndication is a direct property investment where the smaller property investor with limited available capital has an opportunity to invest in commercial, retail or industrial properties.
Another example is a holiday home, but normally this is for private use and not for renting it out at a profit.
- Venture Capital
Some investors have relatively deep pockets and this allows them to invest into high yield projects with minimal effort but slightly higher than average risk.
This means that a developer can go to such a venture capital investor for investment into the property development project if the developer is unable to obtain full funding from a commercial bank.
- Distressed properties
Mortgage borrowers, who can no longer pay for their mortgaged property, may opt to sell their property in order to pay the mortgage.
Examples of situations where distressed sales occur include divorce, foreclosures or relocations.
13. Real Estate Investment Trust – REIT
TYPES OF SA REITs:
All SA REITs own income-producing property. Prior to SA REIT legislation there were historically two forms of listed property investment entities in South Africa: property loan stock companies (PLSs) and property unit trusts (PUTs).
Both were able to adopt the REIT regulatory framework set out by the Johannesburg Stock Exchange (JSE).
The structure is flexible and allows SA REITs to be managed internally or externally, and caters for different equity structures that may exist, such as A and B linked units that have different rights that existed in some property loan stock companies.
Most SA REITs own several kind of commercial properties like shopping centres, office buildings, factories, warehouses, hotels, hospitals and even, to a lesser extent, residential properties, in cities and towns across the country.
Some even invest in properties in other countries.
Under the new tax dispensation, a SA REIT will be able to deduct all distributions paid to shareholders or linked unit holders as an expense.
- Off Plan Properties
Off plan investing is defined as buying property from developers before the building is completed, sometimes even long before the foundations are laid.
Buying a property off the plan means signing a contract to purchase a unit that is yet to be built. You can view the design and building plans but there is no physical property to see or inspect.
The reason many people like to buy off the plan is that they hope the property will be worth more when it is completed so that they can sell it for a profit.
- Estate Agency
Estate agents sell or let residential or commercial properties, businesses or land on behalf of their clients in exchange for a commission.
The commission is not fixed and should be negotiated for each deal.
- Letting Agency
A letting agent is a term for a facilitator through which an agreement is made between a landlord and tenant for the rental of a residential property.
A letting agency will normally charge a commission for their services, usually a percentage of the annual rent.
Yet again this is not a set rate and should be negotiated.
- Managing Agency
Property management involves the processes, systems and manpower required to manage the life cycle of all acquired property as defined above including acquisition, control, accountability, responsibility, maintenance, utilization and disposition, but at a fee.
Yet again these fees should be carefully negotiated.
- Property Crowd Funding
Crowd Funding is the use of small amounts of capital from a large number of individuals to finance a new business venture.
Crowd Funding makes use of the easy accessibility of vast networks of friends, family, colleagues and acquaintances through social media websites including Facebook, Twitter, LinkedIn and also Google+ to get the word out about a new business or property deal with the intent to attract investors.
As you can see there is no shortage of methods to make money from property.
With property investments the more competent you become the smaller the risk will be.
To see an actual case study of how my worst property investment outperformed the best “conventional unit trust investment” by more than 1338% over a 10-year period click here or copy and paste the link below on your browser
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