If you are looking for a way to diversify your assets, you may have thought about investing in real estate. Even though diversification usually refers to stocks, bonds, and mutual funds, it also includes the valuation of your property. In general, the value of your property should go up over time, which is why many people are looking for real estate investments. There are two ways you can make money through real estate investing. Learn more about this process below, and consider reaching out to a professional who can help.

Rental Income

First, you need to think about rental income. Even if you don’t plan on living in the property, you need to take care of it. You need to consider the cost of the water heater, the HVAC unit, and the roof. These items do not last forever. Of course, you also need to think about your mortgage, homeowners insurance, and real estate taxes. You might also have hoi expenses you need to cover. Take a look at how much money you can get for that property in terms of rent. You may want to talk to a real estate agent who can let you know what the local market is like.

The Property’s Capital Appreciation

Of course, you also need to think about capital appreciation. If you purchase a property for $100,000 and then sell it for $200,000, your capital appreciation is a total of $100,000. Each market is different, so you need to take a look at historical appreciation. Has the market gone up approximately five percent every year? Or, has the market gone up approximately ten percent every year? Your capital appreciation is going to play a significant role in the overall value of your real estate investments. Think about how long you want to hold the property before selling it.

Maximize the Value of Your Investments

If you want to maximize the value of your real estate investments, you need to think about both of these pathways. As you look for investment opportunities, analyze the local rental market. Make sure you can make enough money through rent to cover your overhead expenses. Then, take a look at what the local market has done during the past few years. How much has the market appreciated in value? What is your investment horizon? That way, you know what to expect in terms of rental income and capital appreciation.