6 Top Ways to Make Money in Real Estate

[Jorge Vazquez]

6 Top Ways to Make Money in Real Estate

The most experienced real estate investors often diversify their real estate portfolio and invest using two or more methods to make money investing in real estate by purchasing, flipping or leasing properties, and selling properties.

Here are six of the top ways to make money with real estate, which everyone interested in real estate investing should consider.

Related: 6 Top Reasons You Should Invest in Real Estate

#1 Single-Family Rental Properties

One of the best ways for people to begin investing in real estate is to invest in a single-family rental property.

Most importantly, you can focus all your time and energy into one project. Finding, purchasing, rehabbing, leasing, and managing a single property is much easier than a property that houses multiple families or businesses.

Secondly, the risks associated with a single-family property are much lower than a multi-family property, mostly because you are dealing with a smaller property and just one family unit. So your liability is limited, especially compared to a large apartment or office complex.

#2 Multifamily Rental Properties

Once you’ve gained experience investing in single-family homes, you may want to bump up to multifamily rental properties, such as duplexes, triplexes, condos, and apartment complexes.

The biggest benefit to owning a multifamily property with upwards of fifty units is that your potential for profit is much higher than single-family properties. Instead of just one family paying rent, you have multiple payments coming in each month. Plus, leasing and maintenance staff can be centrally located, reducing expenses associated with managing single-unit properties spread throughout the city.

#3 Flipping Houses

While there is significant potential for investors to reap large profits, the process of house flipping is much more complicated than glamorous TV shows make it look.

The reality is that buying, rehabbing, and selling investment properties is a great deal of work, with the potential of losing money on a deal if costs skyrocket due to “unforeseen” problems with a rehab.

The best house flippers are real estate experts in at least one field, which can include real estate sales, construction, and finance.

Related: Tampa – St. Petersburg, Florida 2016 Flipping Rates Were 4th Highest in The U.S.

#4 Wholesaling Properties

Wholesaling investing properties is one of the ways to profit from investment real estate without spending any of your own money.

Real estate wholesalers work exclusively to secure deals for real estate investors who purchase the properties.

In some cases, real estate wholesalers buy the properties before selling them to an investor. But often times, wholesalers assign contracts to investors, whereby they are able to avoid the expense of buying and reselling the property.

#5 Vacation Rentals

Vacation rentals are another great opportunity for beginner real estate investors because they are dealing with a single-family property. Though the return isn’t always as high on a vacation rental, there are other appealing benefits.

For many investors, vacation rentals allow them to have a place to vacation a few weeks during the year, while also generating a profit the rest of the year. Furthermore, vacation properties can have financial and tax benefits, not available with rental property the owner never occupies.

#6 Commercial Buildings

The commercial real estate consists of properties the owner rents out to businesses, which includes “mixed-use” buildings.

Many benefits of investing in the commercial real estate are similar to the residential real estate, although additional benefits include:

• Potentially higher income.
• Building professional relationships via a public presence, such as owning an arena in a large city.
• Advantageous lease terms, such as triple net leases.