By: Enobong Ukpong

How to Build Wealth Through Real Estate

Real estate investment stands as one of the most trustworthy ways to develop wealth. A strategic plan together with market understanding is required to attain success in this field. Real estate investment return maximization depends on these proven methods described below.

1. Rental Properties

Real estate investors benefit from rental, property rentals combined with long-term property market value increase. High-demand neighborhoods surrounding university zones, stand alongside commerce districts and industrial districts as best locations for investment.

2. House Flipping

Real estate investors acquire poorly valued houses that need refurbishment before finding buyers to make profits from the transaction. Property valuation skills and market-time calculations together with renovation cost analysis form the core requirements of this investment method.

3. Short-Term Rentals (Airbnb Model)

Short-term rental marketplaces such as Airbnb provide rewarding investment possibilities to investors. Investors achieve greater profitability by renting their properties in places that attract tourists as well as business districts and urban center locations.

Let’s talk a bit more about “Airbnb”

What is Airbnb?

About Airbnb: What it is and how it works

Host anything, anywhere, so guests can enjoy everything, everywhere.

A community built for belonging

Airbnb began in 2008 when 2 designers who had space to share hosted 3 travelers looking for a place to stay. Now, millions of hosts and guests have created free Airbnb accounts to enjoy each other’s unique view of the world.

How Airbnb Makes Money

Airbnb (ABNB) is part of the sharing economy and has a very profitable business model. The company makes money by facilitating the rental of properties.

In particular, Airbnb takes a percentage of a booking subtotal when a property is rented. This subtotal includes the rental price and any additional fees charged by the host, such as a cleaning or pet fee.

The fees Airbnb charges allow it to pay for its platform and associated costs, as well as for its customer service.

The company offers two fee options, the split-fee and the host-only fee.

• Host-Fee: This is about 3%. Hosts in certain locations, such as Italy, pay a higher percentage. This fee is calculated from the booking subtotal, which excludes taxes and the guest service fee. Airbnb automatically deducts this fee from the host’s payout.
• Guest Service Fee: This amount depends on different factors, including the type of property rented. Most fees are less than 14.2% of the booking subtotal. However, they may go as high as 16.5% if the guest pays in a currency different from the host’s
• Let’s say Airbnb charges the host 3% and the guest 10% for a total of 13%. On a booking for four nights at $500 ($125 per night) with a cleaning fee of $150, the company pockets $84.50.

Host-Only Fee

The host-only fee, also known as simplified pricing, is the less common structure and is usually reserved for traditional properties like hotels and apartment buildings. It’s required when hosts use a property management software or channel manager software to list their properties on Airbnb.

This fee ranges between 14% and 16% for most properties and is paid entirely by the host. The rate may change based on the host type and the stay length.

Also Read: https://globaltrust.ng/the-real-estate-market-of-akwa-ibom-provides-investors-and-new-buyers-with-an-intelligent-investment-choice/