Everybody knows there’s money in the real estate business but when you drive down any street in your town, what do you see?
If you tons of opportunity when you ride down the streets of your town then, perhaps, you need a quick education on the various types of real estate investments there are.
In this blog, we will take a look at some of the most popular, time-tested ways to make money in real estate investing.
You’ll discover how investors are making money, building retirement portfolios and doubling their income by controlling and investing in properties and how you can too!
Long-Term Rental Properties
this is by far my favorite way to make money in real estate investing. You get to maximize so many financial benefits that come along buy-and-hold strategy of investing.
While it does take quite a bit of capital to get started, the returns over the long term are incredible if you buy right and remain patient.
Because there are so many financial benefits that come along with the buy-and-hold strategy, your returns can far outpace other forms of real estate investing. All you have to do is hold the property for long enough period of time.
It’s well worth because the long-term rental properties you benefit from cash flow, equity capture, equity paydown, tax benefits and appreciation, to name a few.
And the best part is, you can do all this without having to commit full-time effort to building your portfolio. You can build your for portfolio over the course of 10, 15, 20 or more years.
This way, when you retire you have potentially millions of dollars in equity and a healthy stream of income to cover all your living expenses for decades a retirement.
Fix and Flips
This method of investing is by far the most exciting way to invest in real estate. That’s why last 10 or 15 years one of the top categories of reality shows has been property flipping shows.
While it may look easy on TV, you need to have a very strong grasp of multiple facets of real estate investing in order to be successful as a fix and flip investor.
The own goal is to make a large net profit at breakneck speed. This takes a lot of work since the primary way you will make a profit is by making the right rehab decisions to the property to increase the value while staying in a comparable range with other properties in the neighborhood.
With fix and flip investing, you have to run it like a business. You are working pretty much daily with contractors, keeping your financials in budget, finding the next deal, marketing to buyers and working to maximize profit.
You have to be on top of the cost of repairs as a fix and flip investor. You will stand a lot of money on rehabbing the property and make a down payment. Even if you use hard money lender, you are still on the hook for that money.
Fix and flip investing is hard and fast paced with a lot at stake. That’s why it’s really important that you have a good understanding of all aspects of this type of investing for diving in.
Wholesaling Properties
This is one of the best ways to get started as a real estate investor while still being able to make some good money.
Wholesaling properties is so great for new investors because it requires virtually no money to get started and there’s very little risk associated with it.
Still, wholesale investors can pocket checks of $2000, $5000, even $10,000 or more per deal.
As wholesale investor you’re basically playing the middleman for motivated sellers and fix and flip investors. The job here is to find motivated sellers of properties that make ideal investments for fix and flip or buy-and-hold investors.
Wholesalers get paid a finder’s fee for their effort.
As a wholesaler your job is to buy a home or just get it under contract. There are ways to do this with very little to zero out-of-pocket costs.
Then, your final job is to sell the home to another investor. You get paid by selling the property at a price that is profitable for you and still good to make a quick deal for the investor.
Some wholesale investors make multiple six figures a year working full-time from home. The benefit peers that you don’t have to make repairs and you don’t have to invest significant, if any, money into these properties in order to generate income.
Your Own Home
One of the best ways to get started as a fix and flip real estate investor is to buy your personal residence that makes a great rehab property.
With this strategy you will choose a property that is perfect as a fix and flip deal that you would be looking to generate $30-$40,000 from in net profit.
However, since you are buying it as your main residence you decreased the risk if it doesn’t happen to sell fast. Many people buy a home in need of repairs at a deep discount – thereby getting a lower mortgage.
With this strategy, investors actually live in the home while fixing it up and making repairs. Once this property is move-in ready investors will sell it or turn it into a rental property. Since one of the main risks of fix and flip investing is having to potentially carry the costs of a house while you’re trying to sell it, the risk is minimized in this case since You are living in the property.
Some investors move from house to house as they sell one investment after another, while others build up a portfolio of rental properties with small down payment using this strategy.
REITs
Real Estate Investment Trusts – REITs for short, can be purchased like stocks and mutual funds. REITs are large funds that invest in real estate and then pass on dividends and profits to shareholders.
These investments are made up of large commercial projects, land, large residential developments, industrial buildings and even government facilities.
Since the trust manages and makes all the decisions on what to invest in this provides a completely hands-off investment experience with investor.
This method of investing works a lot like stocks in that the value of your investment can fluctuate up and down. This is something investors have no control over, it’s a market condition.
Long Distance Investment Property
There are parts of the country that aren’t ideal for investment opportunities in real estate. So while there may be many people who wish to invest in real estate they can’t because of the expensive property prices in the area.
San Francisco, New York and other areas that have really high real estate prices do not make feasible investment opportunities.
Because the housing prices are so expensive, there are many good deals to be found and if you plan on renting these properties, you will find much cash flow.
That’s why finding a great realtor and property manager in the area you wish to invest in is a great idea.
You need to decide where you want to invest that fits the investment business model you have. Then you should find a great realtor who can help you invest in that area. Your agent is the one who will help you find great deals, schedule home inspections and maybe help you find a tenant or buyer.
If you are renting the home then you need to find a property management company. A good property management company can mean the difference in you having profitable rental and money pit.
Vacation Homes
this is another kind of investment that people generate income from. Having a vacation is a property rental method.
To be successful with this kind of investment you need to choose a home in a high tourist location. You also need an experienced property manager to help you rent out the property, manage the property, and collect rent.
The big drawback with a vacation rental is that it is very seasonal by nature. If you have a property in Florida then renters may tend to rent your property will seasonal basis. So while peak season can bring top dollar the off-season can yield zero dollars.
This point has to be considered and cost weighed carefully before moving forward with this type of investment.
Conclusion
There are these and even more ways to invest in real estate. As you can see, it’s really port consider what you want to get out of investing in real estate before committing to a particular strategy.
When you’re clear about your objective for investing in real estate, then you can move forward confidence.
