Definitely, there are lots of ways we can make money by investing in real estate. Investors have lots of options such as long-term rentals, vacation rentals, fix and flip, and so on, to choose from. Some investors prefer investing in real estate with long-term rentals and fix and flip with REITs; and some prefers flipping homes (while many others won't mind doing everything).
Some investors love long-term rentals simply because they offer great returns. And those great returns continue to pay them as long as they own the property. Also, some loves to flip homes because of the money that could be made. Altogether, emphasis should be put on the fact that a great real estate investment offers a splendid return on investors' money (without too much effort). And realistically speaking, we should know that each of the different methods one can invest in real estate has different level of risk, different level of return, and different level of time commitment.
After we've seen the way one can make money investing in real estate, we will see that an investment method such as fix and flipping are more of a full time job than an investment (while some like REITs take almost no work).
Now, let us see 5 ways investors can invest in real estate.
1. LONG TERM PROPERTIES
For many investors, the long-rental properties are their favorite way to invest in real estate. Of course, this investment type can require lots of upfront cash; nevertheless, if an investor buy right and is patient, the returns are so high.
When investing in real estate with long-term rentals, an investor must focus on cash flow. But, what is the best way to get cash flow? The best way to get cash flow is to buy properties at below market value and make repairs to increase value and to choose homes that will give high rent to purchase price ratios.
2. INVESTING WITH FIX AND FLIPS
Fix and flipping is another fabulous way one can invest in real estate. However, though it is a nice method, it takes lots of time. The investor is required to do such things as finding deals, managing contractors, keeping track of accounting, and most importantly getting homes sold. Another thing is that, despite the fact that hard money can be an option to reduce the cash that is needed; it takes a lot of money for down payments and also repairs.
3. WHOLESALING PROPERTIES
What do we mean by the term 'wholesaling real estate'? Wholesaling real estate is simply when an investor buys a home (or gets a home under contract). Then, the investor immediately sells the home to another investor who is buying. This will be sold without making any repairs whatsoever in the home. At times, the investor selling the home might not even buy the home before selling it. Yeah, there are some real estate investors that are actually wholesaling on a full time basic and are making lots of money each month.
Someone can wholesale a house without buying the house. Simply buy getting the under contract and then assigning the contract to some other investor. Wholesaling real estate actually has good advantages. One prominent advantage that is associated with this real estate investment method is that the investor doesn't have to make repairs on the home and he can sell it very quickly. Additionally, it should be added that majority of the properties that are wholesaled are bought through direct marketing.
4. INVESTING WITH A PERSONAL RESIDENCE
An investor can use his or her own personal residence to invest in real estate. Since they aren't bringing in any rent or income, some people may not consider a personal residence a way to invest in real estate. However, there are definitely ways one can make his personal residence a great investment. An investor can buy a personal residence that he can turn into a rental property.
5. INVESTING WITH REITS
REITs stand for Real Estate Investment Trusts. Real Estate Investment Trusts are purchased like stocks or mutual funds. Some investors have purchased a few of them and get good results. In case you don't know, Real Estate Investment Trusts are large funds that invest in real estate, and then they pass on dividends and profits to the shareholders. Real Estate Investment Trusts are known to invest in large commercial projects and industry buildings (and even land and government buildings). The fact about REITs is that, it is the easiest way one can invest in real estate.