Question

What are the main sources of income for a Real Estate Investor and/or Broker?

Answer 1

There are various ways in which a real Estate Investor / Broker could earn.

The real estate investor earns in the following ways:

Enhancement of the Property Value: Though the value of the property does not regularly increase, whenever it does, it provide hefty returns. Multiple reasons such as development in the neighbouring areas, increase in the interest rates, economic development etc. can push the property prices higher.

Rental Income: Rental income is one of the easiest ways to earn money from property. Rental earnings is an income received in exchange of usage of the property. Expenses related to the property also needs to bear by the owner(depending upon the agreement between the parties). So, the total income would be net of expenses.

Profits from business activities: There are various ways known as specialised services or business options such as installing vending machines at your owned property, leasing the roof for communication towers, etc. It requires additional knowledge on the part of the owner.

Other Options: Real Estate investors could also earn from investing in the REITs(Real Estate Investment Trusts). These instruments are listed on the stock exchange. The trusts catering to real estate investments put money on various real estate properties and allows investors to enjoy a share in the expensive properties.

Source of Income for Broker: The broker generally earn money via charging commission on buying and selling properties. Approximately, 70% to 80% buyers uses the facility of broker and the standard commission is about 6% which initially goes to listing brokerage and bifurcated between buying and selling agents, if any.