Making Money By Investing In Real Estate

By Mia Cruz

Here are five of the most common ways to put money to work in real estate, as well as some information about each method:

 

1. Investment properties (rental real estate)

The most obvious way to make money in real estate is to buy an investment property (or several). You could buy a home and rent it out to long-term tenants or buy a multi-unit rental property or small apartment building. You could buy a vacation rental or a property you intend to otherwise rent short-term. Or you could buy a commercial property (any type of property that is not residential real estate) like a retail or office building and lease it to tenants to generate rental income.

Buying an investment property can be a great way to make money in real estate, but it isn't without its drawbacks, and there's quite a bit to learn before you get started.

 

2. REITs

A real estate investment trust, or REIT (pronounced "reet") is a special type of company designed to invest in real estate assets. Think of a REIT as sort of a mutual fund for real estate investment: investors' money is pooled to buy a portfolio of commercial properties or other real estate assets. Many REITs are traded on the stock market and are very easy to buy and sell, making them excellent choices for beginner investors and those with limited capital to invest. And, many pay consistent dividends, making them good options for investors who want steady income.

There are REITs that specialize in just about any type of real estate you can think of, and there are also exchange-traded funds and mutual funds that will allow you to invest in a diverse portfolio of REITs. You can learn more about REIT investing with our guide to the basics of investing in REITs.

 

3. Fix-and-flips

If you've watched HGTV in the past few years, you probably know what flipping houses means. This potentially lucrative form of real estate investing essentially involves taking a rundown residential property, completing repairs and/or renovations, and then selling it at a profit. While the popular fix-and-flip shows make it look easy, flipping houses successfully requires a lot of effort and knowledge of your local real estate market, among other things.

 

4. Wholesaling

A real estate wholesaler serves as a middleman between motivated home sellers and real estate investors. A wholesaler will find a cheap property investment opportunity to buy (if you've ever seen those "we buy ugly houses" signs, those are typically put there by wholesalers). The wholesaler will enter into a contract to buy the property but will then find a real estate investor who is willing to pay a bit more, the difference being the wholesaler's profit margin.

Unlike many other forms of real estate investing, wholesaling can be a very time-consuming job, and there are lots of rules and other things to know.

 

5. Crowdfunding

Real estate crowdfunding is a relatively new form of real estate investing, but there is certainly money to be made. When a developer or professional investor identifies an opportunity to build or buy a commercial real estate asset, they may choose to raise some of the project's capital from individual investors. For example, a crowdfunding deal might aim to purchase a hotel, spend a few years gradually renovating the rooms, and ultimately sell it at a profit. There are several reputable crowdfunding marketplaces, but it's important to point out that most of the best deals are limited to accredited investors only.

• Language: English
• Publisher: Evelyn Barrinuevo
• Release date: Mar 26, 2021
• ISBN: 9781393456728

Mia Cruz

I studied for Business Computer Application Certificate.  And now I am living in North Vancouver, B.C. Canada.  It's a small town in Vancouver.  I work at home doing online business. 

Book preview

Making Money by Investing in Real Estate

Buy Low, Sell High & Beyond

Table of Contents

MAKING MONEY BY INVESTING IN REAL ESTATE...............................1

BUY LOW, SELL HIGH & BEYOND..........................................................1

INTRODUCTION..........................................................3

CHAPTER 1.............................................................4

STRATEGIES IN REAL ESTATE INVESTING.........................................4

Is Real Estate Investing for You?.........................................4

Your First Real Estate Investment........................................5

Profiting in Real Estate.................................................7

Manage Your Exposure................................................7

Getting the Highest Return..............................................8

Buy and Sell at the Right Time...........................................9

Saving Cash on Little Things Adds Up....................................10

CHAPTER 2............................................................12

THE REAL ESTATE SALES PROCESS......................................................12

All About Flipping....................................................12

Finding Financing – Creative Ideas......................................13

The Lender’s Perspective on Loaning Money...............................14

Hunting for Your Hidden Gem..........................................16

The Importance of the Home Inspection...................................17

Minimize your Risk with Insurance.......................................18

Fixing the Property Reaps Financial Rewards..............................20

Selling it Yourself, or Use an Agent?.....................................20

Marketing Plan Development and Execution...............................22

If It’s Not Selling Quickly Enough........................................22

Negotiating a Win-Win Deal............................................23

CHAPTER 3............................................................25

OTHER CONSIDERATIONS IN INVESTING.........................................25

Know the Real Estate Law.............................................25

Investing Tax Implications.............................................26

The Pros and Cons of Rural vs. Urban Investments..........................27

Investing in Real Estate Foreclosures....................................27

Investing in Commercial Property.......................................28

The Pros and Cons of Renting Property...................................29

Alternative Real Estate Investment Instruments.............................30

Conclusion.........................................................32

Introduction

Real Estate investing is one of the most simplistic ways to earn money. With a relatively small monetary investment and some sweat equity, you can turn a substantial profit. The future outlook on real estate investing is positive and constantly evolving.

For new investors, one of the most difficult hurdles to overcome is learning the ropes of the real estate business. Real estate transactions are complicated, and if you are not educated on the ins and outs of the business, you potentially could lose large amounts of money, fast.

Before you get started in real estate investing, spend some time thinking about the best approach for your financial situation, personality, and risk tolerance.

One in four residential homes is bought as investment property. Many real estate investors are regular people just like you who make impressive side incomes.

Some people even earn enough to make real estate investing their primary income.

In this book, you’ll learn about strategies you can use when investing in real estate, the nuances of the complicated sales process, and other points to consider – like real estate law, tax implications, and non-traditional real estate investment options. While being a real estate investor is, at times, stressful, it also can be mentally and financially rewarding.

Chapter 1

Strategies in Real Estate Investing

Is Real Estate Investing for You?

Real estate is an intricate business that involves many different legal, financial, and interpersonal aspects. Are you ready to jump into this complicated business? Think about these essential questions before you make your first move.

How much money can