We all know that real estate investment has been the strongest and most profitable form of investment for hundreds of years. Owning land and using it to generate profit is and still always has been one of the most resourceful and beneficial ways to earn money. To make things even better, in today’s world, there are a huge number of ways to make money from your property investment. Let’s take a look at 2 ways that will help you to decide how you want to invest your money for the best ROI.
Appreciation – Profits earned by Increasing property Value
The term buy low, sell high applies perfectly here. Appreciation is the value that your property gained at the time that you sold it, minus the costs. It is important to remember that your property won’t always go up in value. The value that it gains is done by looking at several different factors. The most obvious form of strong appreciation would be to develop a property on a piece of undeveloped land. This vastly increases the value of the property as developed land is becoming more popular and in demand. To get the most appreciation in value (ROI), however, you should buy in an area where demand is growing faster than the supply. Areas in Phuket that are located on the West Coast, close to the beachfront, generally have a higher appreciation rate than those closer inland. The neighborhood you buy in plays an important role, as it evolves adding infrastructure and transport upgrades, more schools, malls, and playgrounds so will the value of your property.
Rental Income – Profits earned by renting out your property
There are many ways to rent out your property as well as various types of products (property) that you can purchase and offer to your renters. The first is the simple outright purchase of property which is then rented out for commercial, industrial, residential, or commercial purposes. For this type of rental, you own the property outright and can hold onto it till the value climbs enough to sell it high. And in the meantime, you can earn rental income by letting people use your space. Then there are vacation rentals, this rental property falls somewhere between room rentals and buy-and-hold properties. This is a property that you buy and own outright but is considered a short-term rental property as the rental time that you can book is typically 30 days or less per year. These are typically a solid source of income because vacation destinations – tropical islands like Phuket – have value all year round. The guaranteed returns are usually about 7% or more per year. And if you go with an international hotel chain to manage the rental you can expect even higher returns because they have a higher occupancy rate.
If you’re wondering whether or not to invest in real estate and to make it part of your wealth-building plan, sit down and have a conversation with us your trusted investment professional.
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