Real estate investing is a solid way to create long-term income and profits with stability. Below are five ways you can generate success through real estate investing.
1. Single-family Rental Property
Finding and purchasing a single-family home to rent out as a landlord is one of the most popular ways for investors to get into the real estate market. Why is this method so popular? It’s familiar. The process is very similar to that of purchasing the home you already live-in. Once you own the second-home, it’s only a matter of setting a rental price, finding a tenant, and managing the one property. Owning a single-family home can provide years of income for you and your family or can be a relatively easy way to get your investing feet wet before expanding your real estate holdings.
2. Multi-Family Rental Property
Renting a single-family unit is a simple way to make money investing in real-estate, so it follows that multi-family unit is one way to make more money. Multi-family can mean anything from a Duplex to an apartment building with 4, 8, or more units. The key to investing in multi-family units is to decide how many units you can a) afford and b) profitably manage.
The advantage of a single-family property is the ease of management and low risk. With multi-family properties the skill required to manage is higher as is the risk, but the profit potential is also higher as compared with single-family properties. The risk inherent to properties with multiple units is mitigated, however, by the very fact that multiple units can be rented at a time. If one unit is vacant, the other units still provide an income while a tenant can be found for the vacancy as opposed to a single-family unit, which will only generate expenses when vacant.
While renting out a property on a monthly basis provides for steady returns on the initial investment, the most popular way to generate quick-profits is to “flip” a property. Flipping a property requires a little more than simply purchasing a ready-to-rent unit. In order to create a profit the property needs to increase in value between the time of purchase and the time of sale. It is this value difference which creates profit. In order to increase value, improvements will need to be made to the property. When making a decision on the timing for when to flip a home, consider the cost of purchase, the cost of improvements, and the ultimate value for which the property can be sold as well as the time it takes to complete the improvements and sell the property. Speed is key when flipping.
4. Wholesale Investing Properties
If wholesale real estate investing sounds to you like wholesale retail, that’s because it follows the same concept. The wholesaler acts on behalf of sellers to quickly move a high-volume of inventory. To do so, the properties are sold to investors at a price below retail. Because the profit gained from a single sale is not high, wholesaling real estate is dependent more on volume than value.
Wholesale real estate investing does require a certain skill-set, but it can be incredibly profitable to an individual with business acumen and an ability to gather the requisite resources. A research team is needed to scout properties and once those properties are acquired there absolutely must be networking in place to quickly and profitably sell those properties to qualified buyers. Wholesale investing is one way to make money through real estate as a business rather than an individual.
5. Vacation Rentals
Vacation rentals are not time-shares. Homes which can be rented on a short-term basis can provide more substantial income than rental properties if four elements are present: Location, location, location, and proper management. Location is always vital to real estate, but it is absolutely necessary to renting a property as vacation lodging. Ideally, you live in location which is deemed a vacation spot by other people (near a beach, lake, mountain resort, destination city, etc.). In this scenario, managing the property is very easy. If you would like to purchase a vacation home of your own in a location remote from your primary homestead, you can offset the costs associated by renting the property out (yourself, or through a management company) when you are not using it.
NNN Leasing (Commerical)
Triple-net or “NNN” leasing is not for everyone, but it can be enormously profitable for the right investor. The largest hurdle to obtaining a NNN property is capital. Commercial properties can be very expensive, but in return, they can also be very profitable. A triple-net lease is attached to a commercial turnkey property. The lease stipulates that the tenant is wholly responsible for property tax, insurance, and maintenance of the property, in addition to rent. The landlord is not responsible for any of the three primary costs associated with a property, meaning that all rent collected is purely profit. Ideally, a NNN investor would be able to purchase a commercial property without a loan, maximizing profit, but if a loan is required, a portion, or all, of the rent can be allocated to paying it off.
Real estate investing is for everyone. No matter the capital available or skill set possessed, there is a way for any individual to become an investor!
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