Real estate investing has produced more wealth to investors than any other sector throughout history, yet people remain skeptical about entering the business because most think that they need large capital and strong credit in order to make money in real estate. Well, that is not completely true. There are many ways to make money with real estate investments that suit every ambitious investor.
Whether you want to work from home or you have poor credit or even no credit at all, there are ALWAYS ways to make money in real estate. In this blog we provide you with different ways to make money as a real estate investor.
Related: How to Make Money in Real Estate: Follow Our Guide
What are all the different ways to make money with real estate investments?
1- Fix and flip houses
Fixing and flipping real estate properties is one of the best ways to make money in real estate. The steps of this short-term real estate investment strategy are simple. You find an undervalued real estate property that needs renovation, renovate it, and then sell it for a profit. However, in order to succeed in flipping houses, you should find a real estate property in a great location and sell it as quickly as you can, because the longer it takes to sell the house, the more money you are going to lose to insurance payments, property taxes, and mortgage payments.
2- Invest in short-term rentals
As the sharing economy concept is booming, platforms like Airbnb have made it easier for real estate investors to invest in short-term rentals. Demand for short-term rental properties has increased greatly as travelers increasingly prefer alternative accommodation options to hotels. This demand leads to both higher nightly rates and low vacancy rates, making short-term rentals one of the easiest ways to make money in real estate investing. However, when looking for a short-term real estate investment opportunity, focus your search on areas with high demand for short-term rentals such as vacation cities and college areas.
3- Invest in long-term rentals
One of the most common ways to make money in real estate is investing is long-term residential rentals. Following the traditional approach of buy-and-hold, real estate investors can make profit by collecting rent from tenants and most importantly from the increased asset value over time. The key to success in long-term real estate rentals investing is by keeping three principles in your mind: LOCATION LOCATION LOCATION. With a good location, you can quickly rent out your real estate property to a long-term tenant and avoid vacancy costs.
4- Wholesaling
House wholesaling is one of the few ways to invest in real estate without money. Here’s how it works. As a real estate investor, your job is to find an undervalued property, put it under contract, and = then assign the contract to another buyer within a certain amount of time. The trick here is to find a property buyer who is willing to pay more than the price you have under contract. The difference is the profit you make. While wholesaling real estate properties can be one of the great ways to make money, it should be noted that in some states, you need to have a real estate agent license to make a real estate wholesaling deal.
5- Lease options
Lease option is a good strategy to invest in real estate without capital at all. The basic components of this strategy are a lease contract with monthly payments and an option to buy the real estate property at the end of the lease period. Having a lease option in your rental contact is a huge advantage, especially in markets where real estate values grow quickly.
6- Start a real estate partnership
A real estate partnership is a good strategy to invest in real estate, especially if you have low capital. A real estate partnership is when two or more real estate investors pool their resources, talents, and experiences together to make a profitable real estate investment.
7- Real estate crowdfunding
Real estate crowdfunding platforms give a chance for individual investors to pool their money and invest directly in real estate projects, thus creating an innovative way to finance real estate developments.
Related: What’s all this real estate crowdfunding?
8- Buy short sales
A short sale occurs when the lender decides to sell a property because the owner is behind on the mortgage, just right before entering foreclosure. However, succeeding in short sales is tricky, you need to have great negotiation skills, and most importantly you need to pay for the real estate properties outright in cash. Nevertheless, buying short sales is considered one of the fastest ways to make money in real estate investment since their potential return can be instantaneous.
9- Invest in land
Buy land, they’re not making it anymore!
Buying land may not be as favorable as other ways to make money in real estate since purchasing land usually doesn’t generate cash flow. Investing in land can have great future benefits because of its price appreciation; however, the risk associated with this kind of investment is much higher compared to other real estate investments.
10- Invest in REITs (real estate investment trusts)
Real estate investment trusts are property companies that own and manage large real estate portfolios. Most REITs are publicly traded on major stock exchanges, giving real estate investors the opportunity to earn profit (as shareholder dividends) with relatively lower risk and higher liquidity compared to other investments.
11- Consider 1031 exchange
Section 1031 of the IRS code allows real estate investors to reinvest the proceeds of a selling in a new similar property without paying a dime in capital tax gains. 1031 exchanges are governed by strict rules, so make sure to consult professional advice on this matter.
The Bottom Line
There are many ways to make money with real estate investments, you just need to define your goals and choose the investment strategy that suits you the most. Once you make up your mind, use Mashvisor to find and compare the best real estate properties across the US.