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How to Make Money from Real Estate

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How to Make Money from Real Estate

Real estate investing has been around for eons and is considered one of the best places you can stick your money. Right up there with stocks, although as to which is the better investment option is a discussion that splits opinion right down the middle.

As they say, beauty is in the eyes of the beholder. And so it is with these investment options. But that is a subject for another day.

The thing is, real estate has remained one of the best investment vehicles in the history of investing for a reason. It is a powerful tool to build one’s wealth and many have turned millionaires in the process. Of course, a good number have also faltered along the way. As with every other investment out there, it is a double-edged sword: you can succeed or you can fail. The beauty of real estate is that it presents you with multiple alternatives on how to invest your money. Should one not be the ideal type of investment for you, there is always the next option. Here are 6 different methods on how to invest in real estate to drive this point home.

Purchase a Rental Property

Ever considered becoming a landlord? Well, purchasing homes and renting them out is a great way to make some money, whether as your main occupation or side gig.

Before you purchase any property, however, you have to evaluate if the return on investment will be worth it. There are a whole bunch of things involved in evaluating rental property – the neighborhood the property is in, your financial situation obviously, whether the property needs any repairs etcetera.

house

By and large, provided you do your homework prior to sinking your money into the investment, rental property has and will always be a lucrative venture.

House Flipping

House flipping is purchasing properties on the low (often under market value), sprucing them up, and then selling for a tidy sum. The idea is to hunt down bargain homes, make some minor repairs (the less work you put in the better) then sell (flip) for profit. It can be risky business, flipping, but at the same time, extremely rewarding.

house mansion greenery

Becoming a flipper requires the investor to acknowledge that it won’t be smooth sailing all through. Sometimes, the property may not sell as fast as you would like. Other times, the profit may not be much. However, if and when you get into the swing of things, you may find house flipping to be one of the best investment options ever.

Wholesaling

Wholesaling is closely related to house flipping. It works the same actually – find a bargain, turn for a profit – save for the fact that in wholesaling, rarely will you put your money down.

Your work is to search for good property below market value (for example, distressed homes or properties in probate), put it under contract (for a few dollars) then find a buyer (often a real estate investor) to purchase the same. You make a small profit while also leaving room for the investor to make a return.

beautiful house

Not only that, the repair/maintenance role is not your job – that is the investor’s to whom you resell the house.

Rent a Portion of your Home

If you have some extra space at your existing home, you could consider profiting from it by leasing it. Whether it’s the basement, a spare room or other space in your home, it is a good way to try your hand in real estate without putting down any money. And if you warm up to it, you could even go ahead and buy a duplex, residing in one apartment while renting out the next.

for rent sign

Alternatively, if you own a vacation home, renting it out when not in use can be a smart way to bring in some extra cash; money that could really add up over time.

Real Estate Investment Trust (REIT)

What if you love the stock market but still want to get involved in real estate? REIT investments allow you to bring the two together. Basically, a REIT is a fund established to invest in various asset classes including real estate, stocks, bonds and mortgage instruments.

skyscraper building

REITs vary in type. They could be either equity, mortgage or hybrid, depending on which investment vehicle they [the REITs] have invested in. All three make for great investments though, and ideal for anyone strapped for time.

Crowdfunded Real Estate

Crowdfunded real estate is a fairly new way to invest in real estate that involves you, the interested investor, teaming up with others to invest in a rental property, be it residential or commercial. Think of it as pooling resources and investing as a team. You can contribute as little as $1,000 and own a piece of property. It also comes with the added bonus of not requiring one to be an accredited investor as was the case when the idea rolled into town.

crowd in mall

If this sounds like your kind of thing, you will need to join a crowdfunded real estate platform such as Realtyshares and Fundrise to invest.

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When it comes to real estate investment, avoid being guided by emotion. Rather, base your decisions on whether or not the property you’re looking to invest in makes sense based on your needs.

And there is no reason why you shouldn’t become successful in this business.

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