20 Ways to Make Money in Real Estate

So, you want to make money in real estate? There is no other vehicle to build wealth for everyone than real estate.  There we said it.  Sure you could build an app and sell it, win the lottery, marry into a wealthy family, catch a cryptocurrency before it becomes mainstream, or even inherit wealth, but let’s be real, these are all long shots. 

The best historical and future of wealth creation is real estate.  This post will highlight the top 20 ways and we will delve deeper into each of these with later posts. 

1. Rental Properties – This is at the top of the list for a reason… Scaling is the key factor to success.
   • Pros:
     • Passive Income – If managed properly, this is huge!
     • Potential for Long-term appreciation –
     • Tax Benefits – depreciation to offset income, non-tax events
     • Equity Growth – as loan paid down, more equity created
   • Cons:
     • 3 T’s – Tenants, Termites, & Toilets. Finding good tenants and maintaining the property can be significant work.
     • Vacancy – loss of income can impact cash flow and impede valuable maintenance
     • Maintenance can be costly.
2. Flipping – Buy a distressed property at a discounted price, renovate it, and sell it
   • Pros:
     • Potential quick profits – several weeks to several months depending on the extent of the renovations and lead time to sell
     • Can be done part-time – we did 3 projects in Brevard County, FL on a part-time basis
   • Cons:
     • Tough to do with no capital. Funding sources will loan much of what you need, but you will need some ‘skin-in-the-game’.
     • Requires some skill to complete the project in a timely manner. Time and cost overruns prove to be painful.
3. BRRRR – Buy, Renovate, Rent, Refinance, Repeat – Solid strategy to build a rental portfolio
   • Pros:
     • Steady way to add cash flow with your investment
     • Cash out refinance can subsidize the next property
     • Creates sweat equity
   • Cons:
     • Takes knowledge and discipline to estimate and execute renovations in a timely fashion
     • May take time to realize sufficient equity to pull out for next investment
4. REIT – Real Estate Investment Trusts
   • Pros:
     • Diversification of your portfolio assets
     • Professional Management of Properties
     • Liquidity
   • Cons:
     • Limited control over the investment decisions
     • Potential for market fluctuations
     • Volatility
5. Mutual Funds – Based upon Real Estate (recent review)
   • Pros:
     • Diversification of your portfolio assets
     • Professional Management of Properties
     • Liquidity
   • Cons:
     • Limited control over the investment decisions
     • Potential for market fluctuations
     • Volatility
6. Crowdfunding – Invest your money into a platform that provides a return on your investment. Examples: Groundfloor, Cardone Capital, CrowdStreet, etc.
   • Pros:
     • Low minimum investment requirements
     • Ability to invest in a variety of real estate projects
     • Potential for high returns
   • Cons:
     • Limited control over the investment decisions,
     • Potential for project delays or failures
7. Vacation Rentals – VBRO, AirBnB, etc
   • Pros:
     • High rental income potential
     • Ability to use for personal vacation
   • Cons:
     • Seasonal demand
     • High property management and maintenance – almost hotel-level housekeeping service
     • Potential for market fluctuations and vacancy periods
8. Commercial Real Estate – can include apartments, retail space, office space, storage facilities, etc.
   • Pros:
     • Potential for higher rental income
     • Longer Lease Terms
     • Potential for long-term appreciation
   • Cons:
     • Requires significant capital and expertise
     • High property management and maintenance costs
     • Potential for market fluctuations and vacancy periods
9. Real Estate Partnerships – partner with like-minded investors
   • Pros:
     • Ability to pool resources with other investors
     • Potential for shared expertise and knowledge
   • Cons:
     • Potential for conflicts with partners
     • Limited control over the investment decisions
10. Real Estate ETFs (Electronically Traded Funds) – similar to mutual funds, but typically lower fees.
    • Pros:
      • Diversification
      • Professional management
      • Liquidity
    • Cons:
      • Potential for market fluctuations and volatility
      • Limited control over the investment decisions
11. Land Development – Develop vacant land into residences or commercial space
    • Pros:
      • Potential for significant return on investment
      • Express creative design ideas
    • Cons:
      • Requires significant capital and expertise
      • Complex process, need to anticipate issues
12. Real Estate Syndications – Pooled capital to invest in bigger real estate projects
    • Pros:
      • Potential for higher returns due to the scale of the projects
      • Good way to passively invest
    • Cons:
      • Limited control over investment decisions
      • Requires due diligence over the project(s) to understand the risks. Not all pay out as planned.
13. Wholesaling – find a deal and flip it to an investor with a fee to you earn
    • Pros
      • Takes little capital
      • Cash deals close quickly so profits can be quickly realized
    • Cons
      • Requires a network of buyers to quickly disposition the asset
      • Requires determination
      • Must be done within the legalities of the state (some require a real estate license)
14. Real Estate Notes – Be the bank for a property buyer
    • Pros:
      • Passive income received as mortgage payment
      • Investment protected by the underlying asset
    • Cons:
      • Default of buyer triggering a foreclosure
      • Limited control of investment if using a pooled note platform
15. REI Clubs – Network of Real Estate Investors
    • Pros:
      • Ability to network with investors
      • Growth potential through the collective knowledge and resources
    • Cons:
      • Potential conflicts
      • Limited control of investment decisions
16. Real Estate Coaching – Mentoring others how to become a real estate investor
    • Pros:
      • Ability to learn from experienced investors
      • Choose the level of guidance required to achieve your goals
        • 1 on 1
        • Group
        • Virtual
    • Cons:
      • Can be quite costly
      • Some coaches are better than others
17. Tax Liens – Government-guaranteed returns paying other real estate owners’ delinquent tax bills.
    • Pros:
      • Potential for above-average returns (15 to 20+%)
      • Relatively low competition
    • Cons:
      • Limited control over investment decisions
      • Potential for legal and regulatory complications
18. Lease Options – a creative way to help sellers sell at their price. They collect rent for a period, and the buyer qualifies to finance within a set time frame.
    • Pros:
      • Potential for long-term appreciation
      • Ability to generate rental income
    • Cons:
      • Limited control over investment decisions
      • Potential for tenant default
19. Real Estate Auctions –
    • Pros:
      • Ability to buy properties at a discount
    • Cons:
      • Limited ability to due diligence so you buy sight unseen.
      • Avoid bidding wars
20. Private Lending – Put your cash to work, be the bank.
    • Pros:
      • Fixed returns
      • Your terms
    • Cons:
      • Potential for default
      • Depending on your ‘position’ your capital may be at risk

Well, that is quite a lot of information! One can see that there are many ways to make money in the real estate game. It all depends on your available capital, experience level, appetite for risk and desire for control.

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