How to make money in real estate
Make Money In Real Estate
Have you ever wondered how to make money in real estate? We have all heard it has made multiple millionaires, but how did they do it? In this post we highlight multiple ways you can make money in real estate, whether you own it or not.
Make Money in Real Estate Without Owning Property
A REIT is a Real Estate Investment Trust. It operates as a business that owns multiple income generating real estate properties. It utilises the power of shared investing, and pools investors funds together in order to purchase the underlying assets.
REIT’s tend to have very high dividend payout ratios for their investors, often over 75%+. This is why they often provide a great option for people to invest in real estate. Without the investors having to front up the entire capital amount themselves.
REIT’s can be bought and sold on all brokerage platforms, as they trade like a stock. Always make sure you do your research on the REIT before you chose to invest in one. As their underlying assets could be the properties themselves, the mortgages on the properties or a combination of the two.
Fundrise– This gives you the option to access eREIT’s through the app as well as crowdfunded real estate options. It provides you with the option to choose the type of real estate you wish to invest in, whether it is commercial or industrial real estate.
BrickX– This is an Australian app that allows you to purchase a fractional share or “brick” of real estate. It uses the power of crowdfunding to help purchase real estate properties. It pays out rental income in the proportion of ownership of the underlying asset.
Real Estate Funds:
These are investment funds that can be actively or passively managed by finance professionals. Passive investments usually track a benchmark real estate index, and are another great option to invest in real estate without actually owning the underlying property.
These funds often end up investing in the REIT’s that actually own the properties, and as is the case with most managed funds, their value gets updated daily and doesn’t trade like a stock.
Make Money in Real Estate by Owning Property
There are countless TV shows on property flipping, and how to fix up a beaten down house. Property flipping is a popular way to make money from real estate, and has helped countless people build significant wealth.
The goal here is to find a property that has a good structure to it, has a nice block of land but is perhaps run down due to lack of maintenance or slightly older than properties in the area.
Once you own the property you fix it up and make it look new and appealing to new buyers and sell for profit. The key here is to have done solid research of the property and the area, have a great handle on your budget and know what upgrades actually add value to the property.
Do you have a holiday house in an ideal destination, yet rarely use it? Or perhaps go away often for prolonged work trips? If you do, then maybe you should consider using Aribnb to rent out your property.
Airbnb focuses on short-term holiday rentals, and you can rent out individual rooms or the entire property. This is a great way for property owners to make extra money from a property or room not being used often.
One thing to be wary of here are the added tax implications when selling around your capital gains tax exemptions. You should definitely consult your financial advisor before choosing this option.
The most commonly known way to make money through real estate, and that is capital appreciation. You buy and hold a property over a period of time, and in that time the property market increases, causing the value of your property to increase. When you sell you have made a capital gain, through appreciation.
If you live in the property then sell, you will have made a nice capital gain. The one thing people forget here though, is that you still need a roof over your head. So unless you downsize to a cheaper area or smaller property you will then be buying another property in the same market.
This means that you may end up using that capital gain to buy your new property, and therefore actually ended up with no “real” capital gain. This is just something to consider and be aware of when looking at selling your property.
This is a great way to generate monthly cash flow, and also position yourself to potentially gain capital appreciation too. Other benefits from fixed rentals include, having your tenants payments paying off your mortgage on the property and some helpful tax write offs.
Finding a good rental property can be difficult though, so make sure you do your homework when evaluating rental properties. Obviously there are some costs involved in this process like managing fees, maintenance etc. So make sure you have funds available to cover these costs too.
These are some more unconventional ways to make money from your property:
Renting out spare rooms in your house to other guest to live in, ideally their rent would cover your mortgage so you are essentially living rent or mortgage payment “free”
Charge For Parking:
You can also rent out your driveway or garage for parking. This works well if you have a parking spot in your city apartment, or you have a place near a local tourist resort where parking is difficult.
City parking can fetch over $50 per day, so could be a nice little earner for something that is not being used.
Use Your Garage For Rented Storage:
Rent out space in your garage to use as storage. Maybe people in the area are moving and need a place to store some things, or are travelling while renting out their place but don’t want to leave their valuables there. You can provide a safe and reliable place to store their goods
Make Money With A Profession in Real Estate
There is a whole industry dedicated for the buying and selling of property:
- Mortgage Broker
- Real Estate Agent
- House Prepping/cleaning
- Legal conveyancy
A mortgage broker’s job is to act as a middle-man between the buyer of the property and the institution lending the money. Their role is to try and negotiate on your behalf to help you obtain a mortgage so you can purchase a property.
Using a mortgage broker helps cut out a lot of hassle trying to look around for the best fees, as they are often made aware of all the best rates on the market.
This is a good way to make money from real estate, if you are good at negotiating and know your stuff on property you could consider becoming a mortgage broker.
Real Estate Agent:
Real Estate agents are responsible for selling property on behalf of their client. They do this by matching appropriate buyers for the property they are trying to sell.
Agents can make quite nice commissions on sales of properties, and this usually makes up the most of their income. It requires a lot of skill to build trust with clients and potential buyers quickly in order to get the best result.
This is another great way to make money from real estate without having to own any yourself.
People want to buy nice looking houses. So when open houses are being held they need to not only look clean, but also fancy. You can make a lot of money as a cleaner or open house prepper.
Cleaner is self explanatory, you clean the house make sure it is spotless for the house open. You can also do this for other clients to keep their houses clean.
House prepper is someone that prepares the house and styles it so that it appeals to the potential buyers. This helps them find it easier to visualise living in the property and more likely to buy.
If you have a knack for interior design and making houses look liveable than this could be a great way to make money.
Conveyancing and Legal:
When spending a lot of money on a property you want to make sure you aren’t missing the fine print. That is what conveyancers are for. They will represent you in meetings and prepare all the legal documents on your behalf to ensure everything goes smoothly.
If you have a great knowledge of the law, this could be a great way for you to make money from real estate.
There has become a big movement of people employing house coaches or consultants. These consultants help you formulate a plan to purchase your first home, or an investment property.
The plans can include saving strategies as well as utilising their connections to help get better deals on mortgage rates. It could also include analysis of best areas to look for property.
So if you have the experience you could always help coach new home owners through the process of buying property.
This risk/reward ratio here is quite high and you will need to front up a lot of capital in order for this to even get off the ground. However, if you are well organised and have the appropriate skill set then becoming a developer could be an option.
There are big liability options involved with this profession and isn’t something to be taken on lightly, so make sure you do your due diligence and get the appropriate qualifications before starting out.
A lot of money to be made designing or styling peoples homes. People want to live in a nice place, but may not have great taste and need to employ someone that does.
This where a designer or stylist comes in and uses their skillset to make the property look amazing. They may even be able to use their connections in the industry to help get discounts on specific items they suggest.
If you have a taste for style, this could be a very lucrative way to make money from real estate.
Alternative Options To Make Money In Real Estate
Property Social Media Influencers:
Do you have a renovation coming up? Or a new project around the house? Maybe you should consider starting a social media account and documenting the process. There are many social media accounts in the property space that are earning a killing documenting their journeys.
They may be getting free product, paid in cash, monetized through ad revenue or even through affiliate sales, either way if you can build up a strong loyal following that is interested in your journey then that is another way to make money from real estate.
Using your Property for a Photoshoot:
Nowadays everyone wants their social media game to be on point, so much so that businesses are paying thousands of dollars for professional photo studios to show off their products.
In the property space, if you have a beautifully styled kitchen you could consider renting it out for a couple of hours for a photoshoot. Target companies that have kitchenware products and would love to use your kitchen to showcase their products.
You will be able to undercut the professional studios while still making some serious money from your asset.
Real Estate Blog:
You can create a blog about real estate, it is such a vast area that if you found your niche within real estate or property you could become very successful. You would need to provide valuable information to your readers and it may take a while to build up organic reach. If writing and property are something you are passionate about it is a good way to make money in real estate.
Become an Infopreneur or Author:
Sell an e-book or an actual book on your area of expertise in real estate. Maybe you have a printable planner you used to help you through your most recent renovation. Or you are an extremely talented designer and want to sell your designs through a book.
The potential is essentially unlimited on providing information or value to other people looking to make money in real estate.
You could sell a course:
If you have a tried and true system for being able to pick undervalued properties that always returns great investment. Or a blueprint for what areas must be improved during a renovation to add value and what areas you don’t need to worry about.
Another idea would be a design or styling course, teaching people how to style their own homes or others. These would all be great ways to create a course and be able to make money from real estate.
Hopefully you enjoyed this comprehensive list of ways to make money in real estate and found some options you may not have thought about previously. Let me know in the comments below if you found any new tips for making money with real estate in this post? Also please share on social media to help others make money with these options.