Platforms like Airbnb and Uber disrupt the real estate industry, so what are agents, brokers and developers to do? This article will provide insight into why these platforms were made possible in the first place. As well as how they can help you leverage your skillset with a little bit of creativity to make more money.

The secret playbook for making money in real estate

Real estate is one of the greatest industries in both the US and global economies, with several methods to profit.

Of course, you may invest in it directly or indirectly.

Real estate had the best returns of any asset class with half the risk of equities, according to a 145-year research conducted in more than a dozen nations. Alternatively, you might pursue a real estate-related job, such as working for a real estate agency, title business, or property management organization.

Contemplate the following choices as a starting point, not an entire list, as you consider how to generate money in real estate.

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Direct Investment is a great way to make money in real estate.

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Most people associate real estate investment with personally purchasing and owning property. Consider the following strategies to generate money with real estate if you enjoy the notion of owning property.

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1. Wholesaling real estate

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You don’t really acquire the property when you wholesale real estate; instead, you flip the contract to buy it.

This makes it an unusual location to begin a list of ways to profit directly from real estate. However, if they can’t locate any purchasers, real estate wholesalers should be prepared to acquire any property they put under contract.

This is how real estate wholesaling works: You locate a terrific bargain on a home, which is usually a fixer upper. You put it under contract, then locate another bidder who is ready to pay a bit more than your contract price. You assign the contract to them, receiving a margin or fee on the difference between the two prices.

For example, you discover a property worth $100,000 that the owner is ready to sell for $70,000. You put it under contract for $70,000 and then sell it for $75,000 to another real estate investor. They pay $75,000 for it, which is a bargain considering its market worth of $100,000, and you profit $5,000 without ever having to take title to the property.

Does it seem too wonderful to be true? It takes a lot of effort to uncover such fantastic discounts, and it takes much more effort to establish a network of buyers to take these offers off your hands. If you are unable to locate a buyer, you have two options: cancel the sales contract and forfeit any earnest money deposit, or purchase the property yourself.

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2. House Flipping

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The fundamentals of property flipping are well-known. You purchase a fixer-upper, remodel it to create “force equity,” and then sell the renovated house to a buyer.

It takes the ability to locate fantastic offers on houses once again. Negotiating with contractors, managing contractors, identifying which house upgrades increase value and which don’t, dealing with investment property lenders, and having a thorough awareness of the local real estate market are all necessary abilities.

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3. Long-Term Rentals: Buy and Hold

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You’re also familiar with long-term rentals, having perhaps lived in a few yourself.

It’s the traditional landlord model: you acquire a property and then lease it to tenants for a lengthy period of time. When renters fail or otherwise breach your lease, you must maintain the property, collect rent, and enforce the lease agreement, which may include delivering eviction notices and going through the whole eviction procedure.

When looking for homes to purchase and keep, most investors go one of two paths. Some investors purchase turnkey rental homes that are ready for tenants to move in or that already have renters. Others acquire fixer-uppers and adopt the BRRRR approach, which involves renovating the home before refinancing it with a long-term rental property mortgage.

Neither technique is superior or worse; it just depends on whether you’d prefer get a better price in return for the hassles of remodeling.

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4. Short-Term Rentals: Buy and Hold

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Everyone now knows how short-term holiday rentals operate, thanks to Airbnb. You rent out the home to short-term visitors and (for the most part) don’t have to worry about evicting undesirable tenants or hunting down late renters.

However, holiday rentals come with their own set of hazards and issues. You must actively promote the property and maintain a high occupancy rate, or you will lose money each month. You must elegantly furnish and decorate the flat. As you clean the apartment between each visitor, replace the linens, and so on, the repeated turnovers increase expenses and labor.

Start with these suggestions on how to be an Airbnb host if you’re interested in short-term rentals as a method to earn money in real estate.

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5. Purchase a mobile home

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You could always acquire mobile homes instead of single-family houses or multifamily buildings.

For starters, they are far less expensive. They also give greater returns on investment and cap rates since they aren’t “attractive” assets.

Listen to our conversation with Rachel Hernandez, aka “The Mobile Home Gurl,” before dismissing them. You could be pleasantly surprised.

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6. Put money into mobile home parks

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You might also invest in mobile home parks and earn money by renting out pads to mobile home owners.

Of course, a mobile home park is far more expensive than a single mobile home. But the business concept has a lot of advantages, such as not having to maintain any properties!

For an entertaining and informative case study, read about Mr. 1500’s experience owning a mobile home park.

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7. Invest in real estate

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Apart from not needing to maintain any actual dwellings, land has its own set of benefits.

It’s not as glamorous as mobile homes and parks, so there’s less competition. As a result, investors may expect larger potential profits, frequently exceeding 100% on any individual property.

You’ll never have to deal with squatter tenants or hear the phrase “Check’s in the mail!” again.

Check out this land investment case study and then the REtipster land investing course if you’re interested. Seth Williams is a top land investment instructor and investor who teaches in a laid-back, approachable manner.

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8. Commercial Property

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Commercial properties, ranging from tiny corner businesses to towering skyscrapers, are available for purchase.

Commercial structures include the following:

  • Office area
  • Space for retail
  • Space for a restaurant and bar
  • Apartment complexes (any apartment building with five or more units is classified as commercial rather than residential property)
  • Space for industry
  • Self-storage facilities

Commercial real estate properties do not have the same tenant protection rules as residential real estate (excepting apartment complexes). You won’t have to worry about anti-landlord legislation or too stringent regulations if your business renter defaults or breaches your lease agreement; you’ll be able to retrieve your property much more quickly.

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Syndications of Real Estate

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You generally become a silent partner on a major commercial property transaction in a real estate syndication.

This is how it works. The syndicator, a seasoned real estate investor, locates a good bargain on a commercial property, such as an apartment complex. They can’t afford to purchase the land outright, so they enlist the help of partners. Even though the syndicator is a minority stakeholder, the partners normally give the syndicator authority to monitor the agreement and maintain the property.

They get some form of compensation in return for their efforts.

Real estate syndications provide a (relatively) cost-effective option to participate in major commercial real estate transactions. Unfortunately, only authorized investors may normally engage in them due to the SEC’s rigorous regulations.

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Fractional Property Ownership (No. 10)

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Of course, you may form a joint venture with a real estate investor. For example, you identify an experienced investor and offer to contribute 20% of the acquisition price in exchange for 20% ownership.

Check out Arrived as a more flexible option if you enjoy the notion of partial ownership of rentals. You may gain full ownership rights and benefits, including landlord tax deductions, for as little as $100 by purchasing fractional shares in a property.

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How to Make Money in Real Estate Through Indirect Investing

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To invest in real estate, you don’t have to own it outright.

In addition to purchasing homes, I invest in real estate indirectly using the majority of the tactics listed below.

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11. REITs that are publicly traded

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A real estate investment trust (REIT) is a corporation that owns or loans money secured by real estate.

They are traded on public stock exchanges and may be bought and sold immediately. Unlike most other sorts of real estate investments, this makes them liquid.

It also makes them volatile, since share values are simply too tightly linked to stock markets to provide any real diversification.

The way the SEC controls public REITs, however, is their greatest strength and vulnerability. The SEC mandates them to distribute at least 90% of all earnings to shareholders in the form of dividends each year. This results in high dividend yields, but it also means that these funds have limited room for development since REITs find it difficult to reinvest revenues in new buildings.

This is why I prefer private REITs over public REITs.

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Private REITs (12.)

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Some real estate crowdfunding platforms provide their own pooled funds, which are either property owners or debt holders. You may acquire shares in these private REITs directly from the real estate crowdfunding site, unlike publicly listed REITs.

This has three major benefits. First, share prices aren’t very volatile, and they have little correlation with stock markets. As a result, they provide actual diversification from your stock holdings.

Third, they are regulated differently by the SEC, which does not compel them to pay out 90% of their income in dividends. This gives them the freedom to reinvest gains and expand their portfolio, resulting in higher stock prices.

Fundrise and Streitwise are my two favorite private REITs. Streitwise acquires and operates commercial office buildings, whereas Fundrise concentrates on apartment complexes and residential assets. Both accept non-accredited investors, while Fundrise allows you to start investing with as little as $10. Streitwise has a $5,000 minimum investment but has routinely paid out substantial dividends in the 8-10 percent area since its inception.

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Real Estate Loans Crowdfunded

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Real estate crowdfunding investments aren’t limited to private REITs.

Another option is to use investment properties to secure loans. You contribute to a particular loan secured by a home that is being refurbished by a flipper. The flipper pays off the loan when they sell the home — or refinance it if they’re using the BRRRR approach — and you receive your money back with interest. If the flipper fails on the loan, the lender will foreclose, and you will get your money.

Groundfloor, for example, permits non-accredited investors to participate. You may start investing with as little as $10, devoting $10 to each loan that appeals to you. It’s also simple to diversify by distributing your money over many loans.

Groundfloor loans, unlike most real estate investments, are short-term. Groundfloor loans are a more flexible source of passive income than other real estate possibilities since you normally receive your money back in 6-12 months.

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14. Personal Notes

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Nobody says you have to give money to other real estate investors via a third-party lending platform.

Private notes (loans) have been given to real estate investors I know and trust. They pay me interest weekly at a rate of 10% per year, and the loan period is indefinite.

However, you have complete freedom in how you organize your loan. You decide on the interest rate, loan length, and payback schedule. You may register a lien against the property as collateral if you wish to be able to foreclose if they fail.

However, a word of caution: Only lend a private note to experienced real estate investors you know and trust.

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15. ETFs & Mutual Funds

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Want to make a stock investment in real estate?

Some ETFs and mutual funds focus on real estate or sectors having a significant real estate component. You can invest in homebuilder ETFs, for example. Hotel and hospitality corporations, for that matter, possess a lot of land.

While ETFs provide excellent liquidity and are simple to invest in via tax-sheltered retirement accounts, they tend to move in lockstep with the stock market. This reduces the value of diversity.

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16. Private Equity Funds & Opportunity Funds

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You may also invest in private equity funds or opportunity funds to earn money in real estate.

Private equity funds invest in private firms that are not listed on stock markets. Real estate firms are among these enterprises.

Opportunity funds make real estate investments in Qualified Opportunity Zones, which are often low-income neighborhoods. Real estate in these IRS-designated opportunity zones offers specific tax benefits. Investing in qualifying opportunity funds may offer significant tax benefits for high-income individuals.

Many private equity and opportunity funds, however, only allow accredited investors to join.

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How to Make Money as a Real Estate Professional

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Real estate investing isn’t the only method to profit. In the real estate market, you may also make a good living.

While there are many methods to generate money from real estate as a job, here are a few of the more frequent ones:

  • Agent for real estate (commercial or residential)
  • Real estate agent
  • Specialist in real estate marketing
  • Home staging expert
  • Photographer for real estate
  • Property supervisor (commercial or residential)
  • Agent for leasing (commercial or residential)
  • Appraiser of real estate
  • Inspector of houses
  • Real estate lawyer
  • Officer in charge
  • Agent for settlement
  • Account executive or mortgage loan officer
  • Underwriter or mortgage processor
  • Lender of hard money
  • Developer of real estate
  • REIT-related jobs

All of these professions are great for real estate investment as a side hustle!

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Last Thoughts

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There are several methods to profit from real estate. However, if you look into ways to generate money in real estate investment, start with the suggestions above.

If you’re not sure where to start, start with a $10 investment in Fundrise or Groundfloor to begin constructing a real estate investment portfolio. Everyone has $10, and just opening an account and investing a few dollars can get you started on the road to real estate wealth.

You may work your way up from there, but the most essential thing is to take the initial step.

MediaFeed.org syndicated this story, which first published on Sparkrental.com.

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