Ali Ata: 4 Ways to Earn Money from Real Estate Investing

If you’re considering investing in real estate, one important question you probably have in mind is where your profits will come from. Real estate investment expert, Ali Ata, explains:

Real estate investors typically derive their income from four sources.

#1. Appreciation

Most of the things people invest in, whether it’s cars or jewelry, depreciate or lose their value over time, but the same isn’t always true for real estate. Many properties, such as lots, actually appreciate or rise in value over the years. This increase is usually caused by changes in the real estate market. For instance, a newly built commercial center near your property could make surrounding areas busier and more valuable.

The main drawback of investing for appreciation is that it’s very risky. You’re essentially betting on the future, so it pays to perform due diligence before investing in any given property for this purpose.

#2. Cash flow

Ali Ata considers this option ideal for those who cannot handle a lot of risk. Investing for cash flow income usually involves buying a property, such as an apartment building, with the purpose of earning constant and predictable revenue from rent. Other viable properties include commercial spaces, office buildings, and storage units.

#3. Related income

Real estate-related income usually comes in the form of commissions earned from helping clients buy or sell real estate properties. For instance, a real estate broker may get a percentage of the price paid for a piece of land or a building.

#4. Ancillary income

This pertains to income earned not from your real estate investment itself, but something that enhances it. A vending machine placed inside an apartment building you own is a good example. It’s merely an add-on to your main investment (the building), but it offers value to your tenants. Ancillary income is not to be underestimated—the right strategy can give you significant earnings.

Real estate investing is a constantly changing discipline, so people may develop additional means of earning revenue in the coming years. If you are considering starting your journey as an investor, make sure to choose an income source that strikes that delicate balance between profits and risk.