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If there’s one thing that’s evident, it’s that great fortunes have been built with real estate. Housing bubbles aside, there’s only so much open land available and an ever-growing populace competing for it. Even if you’re not looking for a long-term investment, real estate also provides the perfect environment for short-term speculation. The key to success is making savvy investment and speculation choices. Here are 11 superb ways to make money with real estate.
Fixing and Flipping
A popular option for making cash from real estate is to buy a home that needs some TLC, fix it up and sell it. Granted, house flipping typically won’t make you a millionaire overnight. However, it will allow you to bank predictably decent returns. If you possess an eye for bargains and can do the repairs yourself, you can quickly boost the value of a home and pocket the difference.
Buying Foreclosures
Foreclosed homes can be a goldmine if you’re quick to act and know the local market inside and out. Finding the right foreclosed pieces of real estate to invest in is a little tricky. For instance, a particular property might have bigger problems than the former owners’ ability to pay the mortgage. As with any real estate purchase, be sure to go through any property with a fine-toothed comb before pulling the trigger.
Renting Single-Family Homes
One of the surest bets in the real estate market, single-family homes are a good start for the burgeoning landlord. With single-family homes, your tenants tend to be stable, long-term renters that are less troublesome than apartment dwellers. Carefully vetting potential renters is of the utmost importance if you want to avoid undue hassle from your tenants. If you have good credit and don’t mind moderate returns, a single-family home is a smart long-term investment.
Multi-Unit Rentals
Though they’re more work than single-family homes, multi-unit properties such as apartment buildings or condos are more lucrative. If you started off with a few single-family properties, you’ve probably established decent cash flow and can therefore secure a favorable loan if needed. Given the current and probable future state of the economy in the near term, multi-unit rentals are a safe bet. Just be prepared for the headaches that come with renting apartments.
Vacation Rentals
Depending on where you live, vacation rentals can actually be more profitable than long-term leases. The great thing about vacation properties is that you don’t have to worry about evictions or problem tenants. Your customers pay upfront and leave after a week or a month, both of which significantly reduce typical renter headaches. If your region boasts multiple tourist seasons, you can make money year round and pay your mortgages as you go.
Parting Out Properties
Another way to profit from real estate is to buy a large property and sell it off piecemeal. Oftentimes, real estate speculators can make far more by parting out a property than they could by flipping the whole thing. A good example would be subdividing a group of vacation cottages. While you could rent the units for long-term profits, you could just as easily sell them one by one and funnel the revenue into other, more lucrative projects.
Re-Purpose an Existing Property
Many properties have unlocked potential that’s been waiting to shine through given the right opportunity. This is especially true in the realm of commercial real estate. One need look no further than the conversion of old warehouses into luxury loft apartments to see this principle in action. While the challenges presented by zoning regulations and bureaucratic red tape can be tough to negotiate, the resulting profits make it worth the hassle.
Invest in REITs
If you don’t want to get your hands dirty with on-the-ground real estate transactions, equities are a good way to gain exposure to a thriving market. Real Estate Investment Trusts or REITs are arguably the most popular way to benefit from real estate appreciation. As any experienced stockholder knows, not all REITs are created equal. Do your due diligence and kick the tires on any REIT before plowing your money into it.
Property Management
If you’re wary of purchasing any actual real estate yourself, starting a property management company is a good way to benefit from the current rental boom. Single-family homes and multi-unit rental properties require a lot of maintenance and upkeep to retain their value and appeal to renters. The nice thing about a property management business is that it doesn’t require a major initial investment. Start out small and expand your business gradually as you gain experience, contacts and clients.
Become a Part-Time Realtor
You can take advantage of your local real estate knowledge to profit by helping others to find deals while you’re ferreting out your own. Getting a real estate license isn’t especially difficult no matter where you live if you don’t mind doing a little homework and taking a test. Though competition between realtors is often fierce, you can make plenty of dough if you carve out a solid niche for yourself.
Buy Undeveloped Land
Sometimes, it’s best to ditch houses altogether and just focus on the land it’ll eventually be sitting on. Buying raw, undeveloped land and playing around with it can make you a mint if you’re willing to think outside the box. Look for bargain lots located near potential future development and start selling off portions for homes, stores and more as the demand for acreage rises. Even in fairly developed areas, land speculation can pay off in a big way.
Breaking Into the Game
Many would-be entrepreneurs avoid real estate because they believe that deep pockets are required to get started. However, there are clearly plenty of options available to you that don’t require a lot of money. If you need some start-up capital, you can attract the necessary investment funding with the right game plan and a little networking. When all is said and done, the real estate market will always present you with plenty of opportunities for substantial profits. For additional information, check out Bigger Pockets, an incredible resource for real estate investing.
