People get into property investment to make money - right? And there is only one way to do that - right? Wrong. In fact, there are quite a few ways to generate income from property, and which is best for each individual investor depends on their current circumstance, as well as the financial goals they would like to achieve.

As a quick introduction - here are five different ways to make money from investing in property. 

1. Rental Income

Probably the most common type of investment strategy is to own property and charge for the use of it.

Usually this means a home of some description (apartment/unit/house) but in actual fact, there are many other things that can be rented out for a price. From a car parking space, to a storage box, office block and rural land - if you own it, it could potentially be an income opportunity.

But typically, people become landlords, and charge tenants to live in the property. Income will then depend on a variety of factors - where the accommodation is located, the condition of it, and the level of demand.

2. Capital Growth

Investing for capital growth is a slightly riskier path to take, because in order to get the most profit from it, you need to be in it for the long term. It is also imperative to have the right knowledge of where to find properties that will actually provide good capital growth.

It is very possible to achieve significant gains by buying, and then selling, at exactly the right time - and many people do make an impressive profit from having a portfolio based on growth.

However the flip side is that it is a tricky market for beginner/entry level investors to get into (due to the deposit required to secure a property in an area primed for solid capital growth). And because there can often be a negative cash flow (where rental income doesn’t cover mortgage repayments), it can be a tough juggle for those who don’t have extra funds to cover the shortfall.

3. Renovating to Sell

Purchasing a property to renovate, and then sell for a profit, is commonly called ‘flipping’ and is a very popular way for investors to make a lump sum of money in a short time period.

Here is where experience goes a long way, as there not only needs to be knowledge about the property market in general, but also how to complete a renovation for a low cost - while also reaping the benefits of improving the look and functionality of a house.

It is a fine line to balance, and there is always the risk of overcapitalising (spending too much on the refurbishment and not getting it back in value), or missing a movement in the market while the renovation is underway.

But of course everyone has to start somewhere, and as with most things - as long as you do enough research, and speak to enough experts, it is a very real and potential money earner.

4. Development

There’s no question that New Zealand has a housing shortage that won’t be solved anytime soon, so another way to get involved in property investment is by becoming a ‘developer’. And this can be done simply by getting a house built, and then selling it on once completed.

A lot of people can be put off by the process of building - it can be a lot to manage with all the decisions that need to be made, and the worry about going over budget. So presenting a brand new home to the market, without people having to go through the hassle of a design and build, can be a very attractive offering - a winner for a savvy investor!   

Read more: Rental property tax deductions: 4 scenarios that trip up investors

5. Understanding tax 

While tax isn’t necessarily a way of ‘investing’, it is a part of the process that many investors don’t pay enough attention to, and as such - miss out on the maximum earning potential of their properties.

From negative gearing, to income tax on earnings, depreciation and tax-deductible allowances - make sure you understand all the ins and outs of tax implications when it comes to your investment. By reducing the amount of tax payable on your investment proceeds, you will be able to gain a greater income from it - thus, another way to ensure you profit from your property.

---------

Of course, having the right tenants in place is an important part of making money from property investment . Check out our free guide on how to keep risky tenants away.