Real estate is the industry that has provided more millionaires than any other, but a lot of people interested in starting their own business still don’t know how to make money as a real estate investor.
Even if you’re not interested in the real estate industry, you have heard stories about people who have earned millions upon millions buying and selling houses. Despite the popular opinion, you don’t necessarily have to be rich beforehand in order to become a real estate investor. The only think you need is some know-how and the desire to learn.
You probably think that you can earn money easier doing some traditional job or even freelancing. Truth is, both are difficult if you don’t have a clue what you should be doing. Once you make a plan and learn what you should be doing, you can advance and profit. Here are some of the fastest ways you can earn money as a real estate investor.
1. Flipping a Renovated Home
This is the most popular and most talked-about method of earning profit as a real estate investor. Renovating and flipping houses only expanded after the appearance of many renovation TV shows. This is one of the most profitable things you can do, but it’s rather tricky if you’re just starting out. If you don’t have the knowledge of the market, you can end up losing more than profiting.
The best advice is to look for the worst houses in the good, popular neighborhoods. This is where the true profit lies. Of course, you should always know what the value of certain repairs is. Because of this, you should always keep a good relationship with a contractor. Also, be realistic with how much you can take. If you don’t have a lot of money you can invest, don’t buy that run-down property that you need to remake from zero.
2. Finding Long-Term Tenants
Another common method of earning money as a real estate investor is to find long-term tenants who will live in your rental property. People need to live somewhere, and there will always be tenants looking for a place to stay. Finding the right people who would want to spend years in your property is a great way to secure profit.
When it comes to this, location is everything. Owning a home in a good location is crucial if you want to find good tenants quickly. This is even more important than the state of the property itself. When you have found yourself those right tenants, you can rest assured that you will have income for a while.
3. Contract Flipping
Flipping contracts is a great way to make money as a real estate investor without putting up too much capital. What does this mean? You simply find a seller in distress and a buyer who has set his eyes on making a quick purchase. This will help you lower the risk of purchasing a house that won’t have a seller. When you’ve found both parties in advance, you have ensured yourself a fine profit. The hardest part of this method is finding the distressed seller. You can increase your chances by searching for vacant homes that nobody uses, as people are more prepared to sell them.
4. Short Sales
Short sales occur when the owner of the property is late on making monthly payments but the foreclosure still didn’t start. For this to happen, all sides have to agree on the sale, as the house will be sold for less than is owned. This is a good way to purchase a house that won’t have to be renovated.
Short sales can be tricky. Not only that the transaction usually has to be in cash, but often times you won’t get a chance to look at the property by yourself or to arrange a proper inspection. Also, chances are that you won’t be the only investor bidding for the property. However, if you are certain that the property is right for you, short sales can be truly profitable.
5. Vacation Rentals
If you have purchased a home in an attractive area, you might be able to use it as a short-term vacation rental. If on a good location, vacation rentals can end up being as profitable as long-term ones. If you think this is risky, there is good news for you. You can profit from vacation rentals even if you aren’t the legal owner of the property. This is done by connecting with the owners in your area and becoming their property manager. If you manage to satisfy the clients, you can earn a hefty amount in no time, without too much investment.
6. Commercial Real Estate
Another type of property that can bring you profit when you are a real estate investor are commercial properties. Commercial real estate can bring you even more profit than residential property if you know how to properly invest in them. People will always need place for their retail and office space, and commercial real estate is sought-after in a lot of areas. You simply have to think smart and to find a way to reach your business clients. And who knows, in the later years you might even be able to open up some large scale building or a shopping mall.