Real estate is one of the best ways to create wealth. As such, there are several ways through which one can make profits from investing in real estate. In order to know how to make money in real estate, several strategies will be examined subsequently.
1. Become a Landlord
Becoming a landlord is usually the first thing that comes to mind when you think on how to get rich in real estate property investment. Becoming a landlord means purchasing a property investment and renting it out to tenants. But this might be so difficult because being a landlord requires a lot of time, energy and resources. Before you embark on a search for a rental property to buy, you first have to decide on what type of property is best for you. Any of these strategies below can be of help to you;
a. Traditional Rental Strategy
This strategy warrants you to offer your rental property investment for long-term leases, and is usually more than a month. This method is advantageous because of fewer legal issues involved and stability. But it is not a very profitable way of making money in real estate like is the case with short-term rentals.
b. Airbnb Rental Strategy
Considering investing in real estate, another option one has at his doorstep is investing in short-term rental property investment or short-term lease which is a duration of one night to one month. With this, you can get involved by looking for areas with high demands for short-term rentals. Airbnb and VRBO have created a wonderful real estate opportunity for people. Nowadays, people prefer alternative means of accommodations to hotels, so Airbnb and VRBO have exploited the market because the demand for such properties is on the rise. This type of renting option is becoming popular but is obtaining oppositions from hotel owners and local council authorities. The increased demand leads both to greater occupancy and higher night rates. This can be a cool way of how one can make money in real estate due to the high profits from this type of property investment than the traditional renting method. This method of investing in real estate can be most suitable for large cities, college towns and areas popular with holiday makers or tourists.
2. Fixing and Flipping Houses:
Houses are property investments where people do invest in. To fix and flip mainly has to do with buying an old and undervalued (under market value) house that needs renovations, then you arrange it by maintaining it and later on sell those homes at a higher price for profits. This is an excellent short-term real investment strategy best for dynamic individuals.
3. Represent home buyers.
One can start making money in real estate, by being a successful buyer’s agent. In this way, in order to get your own customers, you can carry out rigorous viral advertisements on the social media like facebook, twitter just to name a few and as such making money from real estate property investment.
4. Invest in Real Estate Investment trusts (REITs)
Real estate investment trusts are firms that own, manage and represent large real estate groupings. If you are wondering on how to make money from real estate with fewer risk, then this is the greatest way to carry on investment. Buying shares in real estate investment trust is almost like investing in stocks, but with real estate, your profit will be coming from the appreciation of the real estate and rents. You benefit from this type of investment in that you will not have a direct dealing with the property or the tenants. But this method of making money in real estate is less exciting than the methods stated above.
5. Invest in Non-Performing Notes.
Rather than parking out from your property investment and selling it, lenders will prefer to sell the non performing mortgages to investors at high rates. Non-performing notes are mortgages that mortgagors are behind on. When dealing with this, you need to be very cautious as there can be a great financial risk investing in this investment strategy. Investors can find themselves incurring more cost for closing up and getting a clear title given that the procedures are very lengthy.
6. Investing in 1031 Exchange.
Real estate investors are allowed by section 1031 of the IRS code to sell property investments in exchange for a ‘like-kind’ property of equal or greater value. It is a strategy for making money in real estate as you will not have to spend a dime on capital gain tax. You are allowed by Realized1031.com to co-invest in turn in commercial properties from where you can get bigger profits.
7. Invest in wholesaling houses.
This is one of the only ways on how to get rich in real estate without much money. Wholesaling housing is similar to the fix and flip strategy, but with wholesaling, you would not need to fix the property investment. Wholesaling real estate or investing professionals find homes that are underrated and put them under contract. In order to carry on wholesaling, you have to enter into a contract with a seller, who markets the property, looks for a potential buyer and assigns the contract to the buyer who is willing to pay a slightly higher amount they are under the contract for and keep the difference as profit at the end of the process. The only expenses you incur will be those acquired in the course of looking for potential buyers and at the end, you receive a fee for your services from the seller. Wholesaling can be a wonderful way of raising capital for other real estate investments. In some states, persons carrying out this activity are considered as though acting as real estate agents which requires a license. So it will be good to know what your state considers this activity to be, before getting into it in order not to go against the laws of your state.
8. Start a real estate Brokerage without an office space
Having successfully worked as a real estate agent, the next step of how you can get rich in real estate investment is to become a real estate broker. In order to do this, you need to have a license or you can partner with one who has the license. As a broker, you can go ahead to hire and train agents to work for you on commission. You can get about half of the agents’ commission as income for your brokerage. Many agents do not even have offices because they don’t want to pay a lease fee and Tech powered brokerage Real is an online brokerage which has been able to generate agents online and offers an 85% portion because they don’t have to pay for an expensive office lease.
9. Multifamily Redevelopment
This means representing multifamily owners in their capital and apartment renovation projects. The multifamily platform allowed for capitalization rates of 7-12% in well performing markets and continuous to be one of the strongest classes in commercial real estate due to excellent rent growth, favorable conditions by both small, local and institutional investors and recovering housing market. Skills in finance, construction and management are required for multifamily redevelopment to take place.
10. Apartment Rentals
Making money in real estate can be done easily by renting apartments. This can be done be representing tenants, management companies or small landlords. If you live in a major city like New York and have an exclusive listing, you can charge your customers up to 15% of the year’s rent as commission. But if you don’t find yourself in a major city, you can sign exclusive rights with landlords on rent contracts to always keep their property investments occupied and at the end of the day, entitled to a commission. This is one of the best ways for you to make money in real estate without money.
11. Lease of Commercial Real Estate
The demand for office and commercial space is on an increase given the rise in the number of startups. Investing in real estate and most especially in commercial real estate can be regarded as one of the means of making money in real estate as this can be more profitable than leasing out apartment property investment. The reason for this is simple, commercial leases are usually for a duration of 5 years or more and the commissions in the commercial real estate are also much higher than in individual property investments.
12. Real Estate Crowdfunding
One who does not have much money but wishes to start investing in real estate can go in for real estate crowdfunding as it is a super way on how to make money in real estate. Crowdfunding is similar to a partnership but takes many more partners into consideration. It means that you will invest a small amount of money with others who will also invest a little each to acquire a rental property. This will allow you to start investing in real estate property investment with very small amounts of money and will allow you to expand your portfolio quickly. Despite all these, you have to be very careful with problems which might arise from joint property investment ownership.
13. Build an effective website.
How to get rich in real estate depends on the strategy you use. Property investment be it residential, individual or commercial real estate, your website can have a great impact on your ability to get followers. Investors mostly start their searches online. When it comes to commercial real estate investor, 80% of potential tenants do their searches online. So building a good website should be your priority. It serves as the basis for marketing as you are able to capture traffic and convert visitors to your website and then into potential customers
14. Invest in hard money loans
Hard money lending is an incredible way of making money in real estate. Lenders of hard money finance the sale of real estate to short-term investors. Hard money lending is good because of the low risk involved and high returns on the part of the lender. With this, the lender will be collecting interest on the initial loan amount with knowledge that even if the borrower defaults in payment, the lender still has the property investment to collect his return from. The matter becomes more interesting if the lender has to sell or flip the property, in that case, he earns all the profits.
15. Buy Vacation Properties
Buying a vacation property is apparently the most enjoyable way of investing in real estate. If you are thinking on how to make money in real estate, then try buying a vacation home as it provides a unique opportunity for you to get personal enjoyment and at the same time rent out to customers. It is also excellent for long-term property investment. Homes in these areas tend to appreciate in value more than those of other location.
16. Real estate partnerships
At times, one may nurse the idea of investing in real estate, but feels that being a landlord is not the proper job for him as he has little or no time to run behind the tenant. In this instance, if you are one of these persons, never give up on your thoughts of how to make money in real estate. There is another option for you which is that of entering into a real estate partnership. So depending on the agreement you have with your partners, you might have nothing to do with your tenants nor with the property management. You must bear in mind that entering into a partnership is to complement each other and so you are advised not to get into a partnership with people with whom you have the same strengths or weaknesses. Entering into a real estate partnership gives you the opportunity to share the investment risk.
17. Become a home inspector
Most often than not, people with little or no money are caught-up in a position where they start asking themselves how they can make money in real estate. It has been suggested by great thinkers that one could be investing in real estate by becoming a home inspector. A home inspector is one who looks for homes for those wishing to buy houses. So the buyer spends a few dollars to hire his services. Home inspector is also a great career for people with construction knowledge who want to own their own real estate business. These home inspectors usually command premium rates.
Investing in real estate is so diverse and there are many real estate property investment strategies you can chose amongst, depending on your preferences and available resources. The study above on how to make money in real estate should be able to guide you in making the right choice.