Make Money In Real Estate With 6 Proven Ways
When it comes to properties, there are two different ways to make money in real estate. Buying and keeping can create passive income, whereas flipping houses can generate active income.
Having said that, there are six main ways to make money in real estate. The path you choose will determine whether you can earn a passive or active income.
1. Flipping houses
The house flipping business is a popular choice thanks to home renovation shows. While this is a great way to make money in real estate, navigating these waters can be challenging in the beginning. Without the necessary expertise or experience, you may find yourself on the losing end especially if you don’t choose the correct house.
2. Hard-money lending
If you are not eligible for a bank loan, then you’re in luck. Hard-money lenders would loan you some money (short-term) for your transaction. This bridge loan comes with a high interest rate because it is only for a short time.
A hard money lender could help you close your first deal. Borrowing cash from a lender could be your best bet to make money in real estate if you have a “sure thing” but lack the necessary funds.
3. Contract flipping
Flipping contracts, also known as real estate wholesaling, is one way to make money in real estate without putting up a lot of money. You only need to find a distressed seller and a determined buyer, and then bring them together. For contract flipping to work, you have to find a distressed seller and an eager buyer.
The trick for this type of investment is to locate the sellers and buyers ahead of time so you’re not forced to close escrow on the property.
Lease options are a terrific way to make money in real estate without putting up a lot of money or even having good credit.
If the property market rises significantly, you may be able to purchase a house at a reduced price. You might even resell your rights to that purchase to someone else.
5. Short sale
When the existing owner of a home falls behind on their mortgage but the property hasn’t yet gone into foreclosure, it’s called a short sale. Because the property is being sold for less than what is owed on the current mortgage, all parties involved must agree to the transaction. This could be a fantastic way to make money in real estate without investing a lot.
Short sales might take a long time to complete, but they are often well worth the wait. A short sale’s potential return can be instantaneous. However, don’t expect to receive the property for a bargain; you’ll have to haggle for a reasonable price.
6. Residential rentals
Long-term buy-and-hold residential rentals are the most common way to make money in real estate. People will always require housing, this necessitates the existence of rental properties. To find a property, you must conduct thorough due diligence while keeping one thing in mind: location.
The location of the property you invest in will determine the value of your asset over time as well as your ability to quickly rent that property to a long-term renter.
If a home rental has a positive cash flow, it could be a great way to make money in real estate.
Even though real estate has produced more money than any other industry, many people are still wary of getting involved. Most people believe they need some type of capital to get started, but this isn’t strictly the case. Even if you’re just getting started in real estate, you can make money if you know what you’re doing.
Know other ways to make money in real estate? Tell us in the comments section.