Tricks to Double Your Real Estate Investment
Every investor aspires to own investments that grow by leaps and bounds. Though it sounds surreal to double your investment in the fluctuating markets, it is indeed realizable with appropriate real estate strategies.
All you need to do is make minor changes in the strategies you have adopted to deal with your investment and property. In this article, let’s see how bringing small changes in handling your property can produce lucrative returns. Here are a few tricks that help you multiply your capital vested in the assets.
Investment Tricks to Double your Investment
Investing in Rental Properties
Rental properties earn you a steady passive income and generate positive cash flow. When you own a residential property, rather than renting out the whole property for a residential purpose, rent it out room by room if possible. This helps you increase your returns and double your investment in no time.
Students form a large market for the rent by room method. Hence, you must haunt for the properties in the vicinity of a college or university where this strategy seems prospective.
Venture out on Fix and Flip
With a higher capital in hand, you can buy a rundown property or a semi-constructed that needs renovation. You can refurbish and fix the property to make it more attractive before selling it out for a higher price.
It increases the rate of return and, in turn, doubles your investment at the earliest. You receive high returns but incur the costs proportionately. As a piece of advice, you must estimate the renovation costs before jumping to buy rundown properties.
BRRRR, Buy-Remodel-Rent-Refinance-Repeat, is one of the real estate investment strategies that can be used to pull out the capital retaining your property. You buy a property, remodel it like fix and flip, and then rent the property to enjoy a steady income. You may later refinance it with a long term mortgage.
This strategy seems safe as low potential risk is involved in it as BRRRR is a long term strategy that involves fewer costs and greater returns. The costs incurred under the BRRRR approach are less than that of fix and flip, as fix and flip require the property to be renovated completely. Also, BRRRR does not demand high marketing skills like fix-and-flip. You can respond to the property’s needs by buying it and remodel accordingly and rent it out to start earning.
Long Term Capital Investment
The investment term has a crucial role in escalating your returns as the real estate investments are subjected to market risks. Investing for the short term involves the dynamic market, making it quite difficult to predict any shortfall in demand.
On the other hand, when you lock your capital for the long term, you may see the market fall but equally enjoy the bouncing back trends into even higher scales. Investing for a Longer duration also gives room for a considerable capital appreciation of the asset fetching you greater returns.
Acquaint yourself with Latest Market Trends
Real estate investments always bear fruit to a calculated and informed investor. If you have capital in hand and are ready to plunge into the purchase process, study the market trends.
If the market is predicted to fall, you may purchase the same asset for a lesser investment. When you acquire an asset without costing a fortune during the market’s falling phase, the asset goes through a substantial capital appreciation as it slips into recovery stages. This helps you double your investment within a spell less than the conventional methods of investing.
After going through the strategies, doubling your investment seems lucrative, but the time required decides its worth. The shorter the time needed to double the acquisition, the better the chances of investing in it. So, calculating time forms an integral and essential part.
It is indeed not as harsh and vague as it sounds. There are thumb rules that help you estimate the time to double the vested resources, of which some are briefly discussed below.
Rule 72 – Calculating the Time Required for Doubling your Investment
The Thumb rule 72 is a rule which calculates the period required for doubling the money in real estate under the condition that the earnings are reinvested. According to it, when you divide 72 by the rate of return, you will know when your investment will double.
For instance, if you have made an investment whose rate of return is 9% per annum, then you will double your investment in,
The time required to double your investment = 72/9
= 8 years
The thumb rule works on the compounded interest concept and also assumes the reinvestment of the earnings. Similarly, thumb rule 114 and 144 give the time within which you can triple and make four times your investment, respectively. Like rule 72, you can divide 114 and 144 by the rate of return to determine the time in which your investment triples or increases to four times, respectively.
The thumb rule results are accurate in the range of 5% to 20% of the rate of return. The market trends also fall in the same brackets as the return rate. Hence, you can use these thumb rules to find out when your investment multiplies.
Having discussed all the strategies of double your investment, you are advised to weigh the risks in the investment. To your dismay, the markets may take a toll without any hint evaporating all your hard-earned investments. It is your responsibility to track your asset performance from time to time during difficult times.
It is certain that not all the properties behave the same, to the changes in the markets. The investment options like REITs and prime capital markets have exhibited astounding resilience to the pandemic’s downtrends. These kinds of investments that never let you down in the near future have the potential to amplify your resources vested in an asset.
There are online platforms that help you out to invest in the trending markets. Assetmonk is an online platform that lists out the highly curated assets at strategic locations like Bengaluru, Hyderabad, and Chennai. Through products like Growth, Growth Plus, and Yield, investors can find a suitable property that meets their demands and aspirations. The assets offer a high IRR of up to 21%, realizing your dream of doubling your investment in a short time. For further details, click here!
Investment Tricks FAQ's:
Strategies are adopting which can double your investment. You can diversify your portfolio, invest for the long term, and invest in safer options like REITs and rental properties. Setting your dividends to reinvest is the key to reduce your time in doubling your investment.
When you diversify the portfolio, the underperforming assets might bring you losses, but the stable investments can pull you along your dream of doubling your assets. The performing assets might gain traction under falling trends to boost your income and appreciate your returns, thereby multiplying your investment.
REITs and rental properties let you play safe. They are resilient and elastic to the dynamics as they get back to their track quickly due to the demand and utility factor of housing property and the REITs’ diverse investments.
The thumb rule 72 helps you find out the time for your investment with a specific return rate to double, assuming you reinvest the dividends. According to the rule, 72 must be divided by the return rate to attain the time required to double your investment.