Understanding how to get rich in real estate isn’t always easy, but it can be a lucrative way to grow your wealth once you learn the basics.
With so many different opportunities to enter the real estate arena, it can be hard to know where to start.
Maybe you’re interested in being the next Joanna Gaines, or maybe you’d like to become a landlord. Whatever your end goal, there are more ways to make money in real estate than just owning your home.
From land flipping to rental properties, this guide will go over seven creative real estate investing strategies to help you make the most of your money.
1. Rental Properties
One of the most common ways to successfully invest in real estate is by owning rental properties. A rental property is a home or condominium that you buy with the intent of renting it out for a profit.
These real estate marketing tips can help you get the most from your investment or rental properties.
When you invest in a rental property you ideally want to keep your overhead costs and mortgage as low as possible. These are also known as your carrying costs.
The lower your expenses are on the rental, the more profits you’ll gain month to month from the rent you collect. If you can buy your rental property in cash, that means almost all of your monthly rent is pure profit.
If your rent is higher than your mortgage, you can use that income to pay down your mortgage as quickly as possible.
2. Flip Houses and Flipping Land
Flipping houses is another popular way to make money in real estate. With these types of real estate investments, you buy a home with the intention of renovating it and selling it for a profit.
In this situation, you are likely buying a home or multi-family dwelling that needs a little tender love and care. The more work your home needs, likely the less money you need to buy it.
You’ll also need to keep in mind how much money you’ll need to renovate the house and build those costs into your purchase price. The goal of flipping houses is often to buy a house that needs work in a great neighborhood. This will help your house sell when it’s finished.
The same principals can apply to land flipping. If you can score a piece of land in an up-and-coming neighborhood, you can sell it to a home-builder or real estate developer.
When you're first learning how to get into real estate development, land flipping can be a great starting point.
3. Short Sales
A short sale is when a distressed homeowner is looking to sell their home for less than it is worth to unload the property. When you buy the right short sale, you may make instant equity right off the bat.
Let’s say a home is valued at $300,000 but you are purchasing it through a short sale for $200,000. That’s $100,000 in instant equity. Short sales do often come as-is, so you’ll also need to keep any renovation costs in mind before you buy.
4. Vacation Rental
Vacation rental properties are becoming increasingly popular as a way to earn real estate profits from home.
Travelers looking for hotel alternatives will rent homes from homeowners while on vacation.
If you’re looking to buy a vacation rental property, buying a home or condo in a popular travel destination is always a great place to start. You can often hire a management company and a cleaning crew to help maintain the home and transition it between guests.
Not only will your home earn income from vacation renters, but it will also appreciate in value over time.
Real estate is often one of your biggest investments. A major reason real estate is such a successful buy is that in most cases, your asset will increase in value over time.
Depending on the condition of your home and its location, your appreciation will vary. In strong real estate markets, your home may see a nice appreciation just sitting there. In other areas, finding a home in an up and coming neighborhood may increase its value faster.
6. Commercial Real Estate
Another way to make money in real estate is through investing in commercial real estate. Commercial real estate properties can be anything from a dry cleaner to a coffee shop.
With commercial real estate spaces, you can buy a building or office space and rent it out to tenants for monthly income.
You can also own your own commercial real estate if you run a small business. This means you aren’t paying rent to someone else. The building you’re using as your office space will be accumulating value over time.
7. Income Property
Income property is any piece of real estate you’re earning an income on. A building may have multiple different income-earning components, for example.
Let’s say you own a building with apartments and commercial space on the bottom. You can rent out the commercial space to a business, and the apartments to tenants. You can even live in one of the apartments and use your rent to live mortgage-free.
The same goes for using your personal property as an income property. If you have purchased land, you may be able to build multiple dwellings on it to earn income.
You can also rent out a basement in your home or a separate apartment if you have one.
How to Get Rich in Real Estate
While the ultimate goal is often to get rich in real estate and build a solid portfolio, which investment option will work best for you?
Whether you’re looking to become a landlord, or flip land and houses, entering the real estate market can be a great way to build wealth.
From branching into real estate development to owning several rental properties, there is an option for almost every investor.
For more great real estate resources, check out the blog section for featured articles and tips.