Are you curious about how you can make money in real estate? Look no further! Real estate investing is renowned for creating numerous millionaires worldwide.
This post is for you if you want to generate income and grow your wealth with investment property! I wanted this when I signed up for a creative real estate deal seminar many years ago….. My husband and I then bought properties with seller financing, used credit cards for down payments, lost a ton of money, and had to move in with my parents.😲
Despite this initial failure (from lack of knowledge), we kept going, and fast-forward to today — we now own hotels and syndicate deals in our investment portfolio.
This guide will help you learn how to make real estate money through passive and active investing strategies. Whether you want to take an active role and work hands-on to upgrade and sell properties or prefer a more passive approach, there are many paths to profit if you know where to look.
What are the best ways to Make Money in real estate?
The best way to make money in real estate is to own property that you purchase via leverage (other people’s money), which then generates cash flow and gives you tax benefits and regular real estate income in your bank account. From there, put your profits back into the business and build a real estate portfolio until you have enough income from your investments to cover your living expenses. This is how you achieve financial independence.
If you’re not ready to purchase property, I’ve got you covered! Many strategies are available to help you earn income in the real estate industry while gaining valuable experience. Alternatively, you can explore my post on ways to invest in real estate with no money for more options.
Passive Real Estate Investing
Real estate crowdfunding is a model where investors pool resources to invest in a commercial property. It offers benefits such as access to private real estate deals, portfolio diversification, and high-quality assets that drive returns.
Real estate syndications allow passive investors to fund larger commercial real estate deals, like apartment complexes, without having to purchase or manage the properties directly.
A sponsor puts together the real estate deal in a real estate syndication, while passive investors contribute capital. The sponsor handles selecting the property, raising capital, overseeing renovations, managing the asset, and distributing profits to investors.
Private Money Lending
Private money lenders can earn passive income by investing capital in real estate projects by providing loans or financing to real estate investors in exchange for interest payments or a share of the profits.
Tax Lien Investing
Investing in tax liens or tax deeds are issued when property owners fail to pay their property taxes. Tax lien investors purchase these liens or deeds; if the property owner doesn’t pay, they may acquire the property.
Real Estate Investment Trusts (REITs)
This investment vehicle owns, operates, or finances income-generating real estate. It is designed to allow investors to invest in real estate without the need to own or manage properties themselves directly.
Real estate investment trusts are like mutual funds and are more liquid than directly owning real estate, as their shares are bought and sold on the stock exchange.
Real Estate Notes
Also known as mortgage notes or deeds of trust, this strategy involves purchasing the debt associated with a real estate property instead of the property itself. You can invest in notes through direct purchases, note funds managed by professionals, online note marketplaces, and note brokers who connect buyers with sellers.
Active Real Estate Investing
Short-term rentals, often abbreviated as STRs and sometimes called vacation rentals, are a profitable real estate market segment. These properties are leased for shorter durations, typically on a nightly or weekly basis, as opposed to the traditional long-term lease model.
STRs have gained popularity as a preferred choice for travelers seeking the comforts of a home away from home and for investors looking to generate passive income. Many look at the potential of having a vacation home or an investment property. Here are some things to consider:
Investment Property: If your primary goal is generating income and maximizing return on investment (ROI), you’ll focus on strategies like furnishing, operations, and marketing to attract guests and maximize rental income. Use my vacation rental calculator to get an idea of ROI and conduct a detailed analysis of the property you are looking to purchase.
Vacation Home: If you plan to use the property as a vacation retreat while renting it out occasionally, you’ll need to balance your enjoyment with rental income. This might require a more flexible approach to availability and booking.
Benefits of Short-Term Rentals
You can make money on short-term rentals by listing on a platform like Airbnb or VRBO, an attractive option for real estate investors looking to generate passive income. Short-term or vacation rental properties are typically leased per night or weekly.
Investing in short-term rentals can yield higher rental income than long-term rentals, particularly in areas with high demand for vacation rentals or corporate housing. However, assessing the feasibility of running an Airbnb business versus renting your property on a long-term lease is important, as each location is unique.
The hotel industry also has a higher revenue trend – our properties generate more income than our previous multi-family properties. However, it’s worth noting that managing short-term rentals and hotels requires more operational involvement and effort compared to long-term rental properties.
Furnishing an Airbnb property requires a balance of style, comfort, and functionality. It’s important to create a welcoming atmosphere that reflects the character of the space and the surrounding area. High-quality beds, mattresses, and sofas are a must for guest comfort, while unique decor items can add a personal touch that sets your property apart. Be sure to include the Airbnb essentials that guests expect.
Managing vacation rental properties without a property management company can be more labor-intensive than long-term rentals. To succeed in this area, consider various operations factors, including:
- Collecting Vacation Rent Payments: Efficiently handling rental payments helps you get paid!
- Effective Cleaning Procedures: Maintaining high cleanliness standards helps to keep your guests happy.
- Devising Marketing and Promotion Strategies: Attracting new guests is key to a successful short-term rental business.
- Structure Agreements: Create a short-term rental agreement or corporate lease that specifies house rules, payment details, and other key details for guests.
To effectively manage the dynamics of these properties in the hospitality market, consider many of the tools available, such as dynamic pricing software, to help you determine pricing strategy. Also, leverage property management systems like iGMS and guest communication software.
Explore the various strategies for this niche, such as renting an entire house, rent arbitrage, or even bed-flipping, where rooms are rented out individually. Each strategy brings its own unique merits and opportunities to the table.
There are many ways to finance your short-term rentals, enabling you to quickly build a portfolio of properties. Evaluate options for vacation rental homes, including using a DSCR loan, which finances a property based on its income, or other vacation rental loan options like a cash-out refinance of existing property.
- List your property on multiple platforms (e.g., Airbnb, VRBO, Booking.com) to expand your reach. Use Airbnb, VRBO, and/or Booking.com, depending on your property type.
- Use engaging descriptions.
- Consider creating a vacation rental website to maximize direct bookings and reduce fees.
- Develop a loyalty or incentives program for repeat guests and referrals.
There is a growing trend of medium-term rentals in the real estate world! This trend is not just a fad; it’s a smart strategy that could make you some serious money!
This residential real estate strategy caters to the growing demand of people who love a nomadic lifestyle, giving them more stability than short-term options. Think – people like traveling nurses, students, and professionals relocating for their jobs.
Unlike short-term rentals that require constant maintenance, mid-term rentals offer a long-lasting investment opportunity and greater financial stability. By accommodating guests for several months to a year, you can enjoy a steady income while reducing tenant turnover and wear and tear on your property.
This makes it an attractive option to investors who have been in the short-term rental space and want to change, are seeing cash flow challenges due to competition, or are facing new regulations that impact their real estate investment.
My tips for this strategy:
- Conduct market research before buying an investment property for this space. I cover market research in detail here.
- Consider various tenant demographics to target, including renting your house to corporate housing and traveling nurses.
- Provide the essential amenities required for short-term stays, and consider including additional extras to cater to the needs of longer-term renters.
- Manage your mid-term rental with the same software used for short-term rentals, including vacation rental property management software, Airbnb apps, messaging tools, and channel management.
- Leverage automation, including tools like smart locks, to reduce your operational costs and increase cash flow.
Hotels and motels
This is my space!! My husband and I invest in hotels. This journey began with single-family homes and apartment complexes but eventually transitioned into hotel investing. You can read some of my story on BiggerPockets or catch the Podcast version.
Hotels offer investors the potential for higher revenue through room revenue and capital appreciation from property value appreciation. However, hotels carry several risks, such as seasonality, competition from alternative lodging options like Airbnb, and economic downturns that can impact travel demand.
Real Estate Syndications
Forming partnerships or syndicates like GP vs LP involves pooling funds from multiple investors and investing in larger real estate projects, such as apartment complexes, commercial buildings, or development projects. As a syndicator, you coordinate the investment, manage the project, and distribute profits to the investors.
Investors benefit through passive income, tax benefits, cash flow, and portfolio diversification versus all in the stock market.
My main business currently involves using syndications to raise funds and purchase hotels. Syndication allows you to scale your business and expand into multiple commercial properties.
My Tips for This Strategy
- You need a proven track record in the commercial property space you are targeting, such as self-storage, multifamily, or hotels.
- Develop your network of other investors by joining local real estate investment groups and local organizations in your chosen industry space.
- Tell everyone what you do in the local real estate market and share your success stories.
- Work with real estate attorneys on your syndication paperwork — they can guide you on the right options for your business and help structure the Offering Memorandum (OM).
- Use tools like investor portals or syndication software to help manage capital raise and ongoing distributions for your investors.
To learn more about our journey and how we ventured into hotel syndications, watch my interview on BiggerPockets:
Arbitrage in real estate investing refers to taking advantage of price differences in different markets. Investors buy properties at a lower price in one market and quickly sell them at a higher price in another.
Ways to leverage arbitrage in today’s market include:
Airbnb rent arbitrage is a form of arbitrage that involves taking advantage of price discrepancies on Airbnb. This involves booking an Airbnb rental in one location and then renting it out to someone else in another location. This creates a situation where you profit from the difference between the two prices. You are hosting without owning property. 🏡
Through this strategic arrangement, you can invest without owning property and optimize your rental income while providing a valuable service to travelers seeking temporary accommodation options.
Condos are typically smaller and less expensive than single-family homes and can be a great entry point into residential real estate. Condos also may have less maintenance than individual homes because the condo building’s management takes care of common areas and exterior maintenance.
Multifamily homes are buildings with multiple residential units, such as apartment buildings, duplexes, or townhomes.
- Commercial properties offer scalability with higher rental income from multiple units.
- Evaluate properties using cap rates vs. IRR, 50 percent rule, vacancy rates, and negative leverage.
- For funding, check DSCR loan requirements for property eligibility.
- Consider multifamily syndication for business expansion.
- Utilize tenant screening services to keep your property as stable as possible.
Mobile homes are typically less expensive than traditional homes, making them an accessible entry point for first-time investors.
- Mobile home flipping is a potential strategy.
- Explore financing options like hard money lenders, HELOC, or private lenders.
Glamping As A Business
Glamping as a business is a form of hospitality that offers guests a luxurious and unique camping experience, blending the comforts of a hotel with the beauty of the outdoors.
Cooperative housing, or co-op housing, is a type of real estate ownership in which residents own shares in a corporation that owns the building or property. Instead of purchasing a unit, as with a traditional condo or apartment, residents buy shares in the cooperative and are granted a proprietary lease for their units.
Student housing primarily targets properties located near universities, encompassing both single-family homes and multi-family buildings. According to Business Research Insights, this real estate segment is expected to have a compound annual growth rate of 4.95% through 2031.
Assisted living facilities may be in spacious apartment complexes or individual single-family homes.
- Investors often collaborate with operators for management.
- A significant investment opportunity is anticipated.
- NIC research suggests a demand for 60,000-80,000 new units annually by 2040.
Affordable housing as a real estate investment refers to acquiring or developing properties that provide low-cost, quality living spaces for individuals and families with limited income.
Triple Net Lease (NNN)
In this real estate investment model, tenants cover all property-related expenses, including property taxes, insurance, and maintenance costs. The landlord has minimal property management responsibilities and enjoys a steady flow of rental income without incurring additional expenses.
Office buildings are commercial properties businesses and organizations rent to serve as office spaces. The office market has experienced challenges recently due to the COVID-19 pandemic and the increasing prevalence of remote work.
Medical office buildings (MOBs)
Buildings that house doctors, dentists, and other medical practices are considered recession-proof. I once collaborated with a real estate flipper who is a therapist, a real estate investor, and a MOB building owner. His property comprises multiple suites, which he rents out to other therapists.
Retail properties are commonly found in high-traffic areas, such as shopping centers, strip malls, and urban districts, which can attract tenants like national chains, local businesses, and restaurants.
Self-storage facilities are commercial properties that provide individual storage units for rent to customers who need extra space to store their personal or business belongings.
- Self-storage real estate has risks: supply and demand fluctuations, competition, and economic downturns affecting rental demand.
- Data Bridge Market Research projects 8.2% growth in the self-storage and moving services market by 2029.
Farm investing involves purchasing land and leasing it to farmers or operating the farm personally to generate income from crop yields and livestock production. Or passively investing through REITs, Crowdfunding, or sites like Acetrader.com.
Religious buildings (churches, mosques, temples)
You can purchase or lease a space, such as a building or land, and then lease it to churches or other religious organizations. You could approach this investment as a traditional commercial property with a tenant or leverage land lease as a strategy.
Educational Buildings (charter schools, university buildings)
An individual investor can own educational buildings by purchasing or developing a suitable property and then leasing it to an operator. This arrangement allows the investor to generate rental income while providing educational facilities for the community.
Sports facilities (gyms, outdoor fields)
Owning a gym, outdoor field, or other sports facility as a real estate investment involves purchasing or leasing a property and developing it into its intended use.
You can generate steady income from membership fees, rental bookings, and events, mainly if the facility is well-maintained and offers popular amenities or services that cater to the local community’s needs.
Entertainment venues (theaters, amusement parks)
Owning small entertainment venues, like theaters, as an investment involves purchasing a property and operating it as a space for live performances, film screenings, or other cultural events.
According to Technavio, this market is expected to experience a compound annual compound growth rate of 12.29% through 2026.
Owning airport hangars as an investment involves purchasing or constructing hangar facilities at airports to lease out to private aircraft owners or aviation service providers.
Investing in residential land involves acquiring a plot to develop into housing units, such as single-family homes, apartments, or condominiums. This type of investment can provide substantial returns as the demand for housing continues to grow in many areas due to population growth and urbanization.
In this investment approach, you would acquire land to develop into retail, office, or other commercial spaces. This strategy often increases the property’s value over time, particularly in growing areas and prime locations with high demand for commercial real estate.
If you have land available, you can get paid by renting this space out for gardeners to grow small crops, events, or even campers. Here are some sites to check out:
RV Parks And Campgrounds
After months of sheltering in place during the pandemic, we rented an RV through Outdoorsy and visited Utah’s national parks in the fall of 2020. We quickly became enamored with RVing due to its flexibility and the ability to bring our rescue dogs along. At one point, we even considered purchasing an RV, and my husband developed a keen interest in constructing RV storage facilities as an investment opportunity.
This investment strategy is cost-effective and doesn’t require substantial capital. You can find land for sale or contact property owners to see if they want to sell. To earn income through this method, negotiate a discounted price and then resell the land at a profit, typically using a promissory note that creates a strong cash-on-cash return.
If you want expert guidance on the systems, processes, and techniques for land flipping, check out Jack Bosch’s Land Profit Generator – an excellent training resource to help you master the art of land flipping.
Halfway houses provide temporary accommodations and assistance to people transitioning from institutional environments, like prisons or rehab facilities, to reintegrating into society. BiggerPockets features an article that provides guidance on investing in halfway houses and outlines the steps to get started in this unique investment opportunity.
Renovate and sell homes for profit.
- Identify undervalued properties using hard money lending, manage renovations, and sell at higher prices.
- Consider your real estate investing strategy; check out renting vs. flipping for guidance.
A few years ago, I partnered with a flipper to fund the construction costs and received a return on my investment. I got to see the details on how these projects work and have always been interested in this strategy.
A wholesaler finds property deals for investors in spaces like house flipping or buy and hold. The wholesaler develops a network and process for finding leads and passes those on to the investor. The wholesaler then gets paid a finder’s fee from the investor.
Real Estate Jobs And Services
Real Estate Agent
Obtaining a real estate license can be advantageous for investors, as it provides direct access to new listings, offers opportunities to build a network of fellow realtors, and helps gain a deeper understanding of the local market.
If you want to become an agent with sustainable business growth, harness the potential of digital marketing by creating a blog.
Property managers handle the daily operations of rental properties for property owners, which may involve advertising vacancies, screening tenants, collecting rent, and managing maintenance requests.
Real Estate Photographer
Offering photography services to capture real estate properties for Airbnb listings, MLS, or marketing materials. I once hired a commercial building photographer to take pictures of our hotels, including the interior rooms displayed on the website.
Home staging enhances a property’s appeal by showcasing its potential and enabling buyers to envision themselves living in the space. This strategy often leads to faster sales and higher prices, making it a valuable investment for homeowners and real estate agents.
Real Estate Appraiser
Property appraisers determine market values for residential or commercial properties. Steps to become a real estate appraiser:
- Complete education and training in property valuation and real estate principles.
- Gain practical experience through apprenticeship or mentorship.
- Pass state licensing or certification exam.
Research local regulations as requirements vary by location.
Real Estate Writer/Blogger
Creating content related to real estate, such as articles, blog posts, or social media updates, for real estate websites, blogs, or publications.
This blog is a great example. I focus on providing fellow real estate investors with ideas, insight, and resources to support their investing businesses.
Before investing in a property, they may purchase inspection services to determine structural, appliances, plumbing issues, etc. The inspection report can then negotiate repairs or pricing with the property sellers.
Real Estate Virtual Assistant
This role involves assisting real estate agents or brokers with administrative tasks, marketing, client communications, or research.
Offering notary services for real estate transactions involves verifying signatures and notarizing documents.
Real Estate Educator
Offer real estate courses, workshops, or seminars to share industry expertise. Steps to start:
- Gain experience and a proven track record in your niche.
- Create a curriculum for classes or coaching programs.
- Build an online presence and attract a following to reach potential students.
Real Estate Investment Club
Initiating or heading a real estate investment club or networking group is a great way to gather individuals with similar interests, allowing them to share insights, experiences, and investment prospects. You can begin with a small-scale Meetup and gradually expand your network.
Real Estate Social Media Manager
To manage social media for real estate investors, learn about the industry and platforms, develop content creation and analytics skills, build a portfolio, network with professionals, and stay updated on marketing trends to establish yourself.
Utilize your software development expertise to develop an innovative PropTech solution. PropTech, which stands for property technology, uses technology to modernize the real estate industry. This is an area of continued growth and investment with an estimated 15.7% compounded annual growth rate:
Real Estate Investment Event Organizer
Plan and host real estate investment workshops, conferences, or networking events to bring together investors, industry professionals, and experts. Organizing an event offers a multitude of advantages. By doing so, you can develop industry connections, generate revenue through sponsorships, and, most notably, establish yourself as an authoritative figure in your field.
Are you wondering where to begin?
InEvent, a distinguished platform for conference technology, offers a comprehensive solution for organizing extraordinary in-person, virtual, or hybrid events. With many indispensable tools and resources, such as blog articles, a podcast, and a community for event planners, they are well-equipped to guide you with best practices.
Capital Investment Fundraiser
One of the things I loved most about hosting the podcast was the opportunity to connect with some seriously inspiring individuals. I enjoyed chatting with some folks who work in a very intriguing capacity: connecting real estate syndicators and operators with potential private money investors.
The way they do it is by developing a robust network through a variety of channels, including in-person events, social media, and, of course, podcasts like ours. By casting a wide net and establishing themselves as trusted authorities in the industry, they can make connections and get paid for their work.
Check out my series of articles on raising capital and finding investors, including:
Real Estate Technology and Digital Real Estate
AI Real Estate Solutions
You have probably heard of ChatGPT and the generative AI industry, which has created numerous software solutions that use this capability. Real estate is no different, and several AI-driven tools are helping real estate agents and investors make better and more efficient decisions.
Here are some ways you can leverage AI to make money in real estate:
- Property Management: AI can automate routine tasks such as tenant screening, rent collection, and maintenance requests, reducing operational costs and increasing efficiency.
- Virtual Property Tours: AI-powered virtual tours can provide potential buyers or renters with a realistic experience of the property, increasing engagement and potentially leading to faster sales or rentals.
- Investment Analysis: AI can help analyze potential investment opportunities, calculate ROI, and provide insights into the profitability of a property.
- Chatbots: AI-powered chatbots can provide 24/7 customer service, answering queries and providing information to potential clients, improving customer satisfaction and loyalty. Ensure your chatbot is fully optimized to achieve the highest possible conversion rates.
- Lead Generation: AI can analyze customer data, such as demographics, interests, and preferences, to tailor content and create ads that attract potential buyers or sellers. A chatbot used in this way is especially valuable for a real estate agent.
- Automated Property Valuation: AI algorithms can predict a property’s value based on various factors, such as location, size, condition, and market trends. This can help real estate agents price properties more accurately.
- Property Inspection: AI-powered inspection tools can enable thorough physical inspections. AI-driven document analysis can review property records and title history, reducing the risk of overlooking critical information.
- Multi-Family Operations: Chatbots can assist leasing agents by automating responses to common inquiries, scheduling viewings, and allowing residents to open service requests, ensuring efficient handling of maintenance issues.
This role involves overseeing the planning, execution, and management of real estate investment projects, coordinating with various stakeholders, and ensuring projects stay on track and within budget.
To become a project manager in the real estate industry, develop a strong understanding of the various parts of real estate development, construction, and property management.
Digital Real Estate
Digital real estate: online properties like domains, websites, e-commerce, and the Metaverse. The concept of digital real estate also encompasses the role of a digital landlord. In this capacity, you operate websites and ‘lease’ them to businesses seeking the web traffic you can produce. For more insights, refer to my interview with a highly successful digital landlord who manages over 700 websites.
- Due diligence in digital real estate is crucial, like traditional investing.
- Examine virtual property: traffic sources, revenue, costs, and market potential.
- Verify information and consult professionals if needed.
- Ensure informed decisions and risk mitigation.
YouTube Channel Host
Create video content on YouTube focused on real estate investing, including property analysis, investment strategies, market updates, and investor education. Do you believe it’s too late to start creating content on YouTube? Think again! Statista presents a forecast showing continued growth in the platform, indicating ample opportunity for new creators to succeed.
Real Estate Podcaster
Create a podcast on real estate investing and invite guests and experts to share their experiences. You could focus on a specific niche, such as Mobile Home investing, or cover a broader set of real estate investing topics.
SEO Services For Real Estate
SEO specialists utilize various tools and deep insights to optimize websites and online platforms of real estate investment companies for search engines. They implement effective strategies to enhance online visibility and attract potential investors.
Creative Real Estate Income Strategies
House hacking is a creative investment strategy where you offset your housing costs by renting out a portion of your property. You can do this by purchasing a multi-family property and living in one unit while renting out the others or renting out spare bedrooms or basement apartments within a single-family home.
Rent Out a Spare Room
If you have a spare bedroom you aren’t using; you could rent this space out long-term or short-term. This is a very simple way to earn money. Here are a few platforms you could use to list your spare room:
Accessory Dwelling Unit (ADU)
An ADU is a separate living space on the same property as your primary residence. You can build or convert a structure like a basement, garage, or separate apartment and rent it out while living in the main house.
Rent Out Your Driveway
Do you have some extra space in your driveway? Trade it for cold, hard cash by renting it out! It’s a great way to use something you own and make an easy profit.
Some platforms to check out include:
Purchase a distressed property at a lower price, live in it while renovating, and then sell it for a profit. By combining your living space with your investment project, you can save on housing costs while increasing the property’s value.
Still wondering how to make money in real estate investing?
There are so many ways to make money in real estate investing — even if you don’t have money! All you need to do is start. Don’t get into analysis-paralysis. Conduct due diligence, but don’t wait for everything to be perfect. You’ll learn as you go.
How can real estate investing benefit you?
No matter your goals, real estate can provide a mechanism to get there. Let’s say you want extra income — real estate investing can provide rental cash flow. Or, if you want to become an entrepreneur and build a large real estate business, there’s a path here, too.
Real estate investing also offers tax benefits through a 1031 exchange. This IRS-approved strategy lets investors defer capital gains tax by reinvesting sale proceeds into a ‘like-kind’ property — see identification rules. It boosts tax efficiency, increases purchasing power, and allows portfolio growth.
If you want to make money in real estate, you will find at least one strategy from this post that you can do today!
From proven methods like owning rental properties and flipping houses to innovative new approaches like real estate crowdfunding platforms, there are many paths to profit if you know where to look.
Whether you want to take an active role and work hands-on to upgrade and sell properties or prefer a more passive approach, the tips in this post will set you on the path to financial freedom.
Uncover your inner mogul and start staking your claim in the real estate investing industry today!
Real Estate Investing: FAQ
How can I make Money on Real Estate with no money?
You can become a wholesaler or connector or leverage the rent arbitrage strategy. Or, you can apply creative financing strategies like purchase money mortgage, seller carry-back, or subject-to mortgages.
what is the easiest way to make money in real estate?
The easiest way is to be passive, investing with an experienced real estate investor on projects. You can do this through syndications, crowdfunding, or REITs.
How Do I Fund Deals?
You can use mortgages, creative financing, partner with investors or raise capital.