In today’s economy, investors are looking for the best ways to invest their money for a great return on investment. If you’re considering a career as a real estate investor, you’ll be pleased to hear that real estate remains the best way to invest money! Now, this begs the question: How to make a lot of money in real estate investing?
One of the benefits of investing your money in real estate is that there is no “one way fits all”! There are many ways to answer the question how to make a lot of money in real estate investing, and as a real estate investor, you can choose whichever investment strategies work best for your investment and financial goals. Without further ado, here are the best ways of how to make a lot of money in real estate investing.
How to Make a Lot of Money in Real Estate: Single-Family Homes
Single-family homes (often abbreviated as SFHs) are the most common type of residential real estate investment properties. These investment properties consist of one residential unit which houses only one family, are built on a single lot, and are not attached to anyone else’s residence. Single-family homes are recommended to beginner property investors looking for how to make a lot of money in real estate. Why so? Investing in this type of investment properties means the real estate investor rents out the income property to long-term tenants. Thus, property investors can rely on single-family homes to generate positive cash flow for the long-term. If you’re wondering how to make a lot of money in real estate, you can’t go wrong with single-family homes.
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How to Make a Lot of Money in Real Estate: Multi-Family Homes
These are another type of residential real estate investment properties. As their name states, multi-family homes (often abbreviated as MFHs) consist of more than one residential unit to house more than one family. They range from anything between duplexes to 32-unit apartment complexes! Similar to single-family homes, property investors in multi-family homes rent out investment properties to long-term tenants. However, these are recommended to experienced property investors looking for ways of how to make a lot of money in real estate. Nevertheless, property investors secure an even higher positive cash flow and return on investment since multi-family homes contain more residential units, meaning more tenants paying monthly rent.
Related: Best Long-Term Investments: Single-Family and Multi-Family Homes
How to Make a Lot of Money in Real Estate: Airbnb Rentals
Airbnb is an online platform which allows a real estate investor to rent out a residential income property for the short-term (normally less than 6 months). Airbnb rentals also range in type: a real estate investor can rent out a primary residence or even a room in his/her own house, or invest in Airbnb through vacation rentals. This is of the best real estate investment strategies on how to make a lot of money in real estate. Airbnb rental has proven to be a very profitable investment strategy and, depending on the location of the income property, can even yield a higher return on investment than traditional residential rentals.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
How to Make a Lot of Money in Real Estate: Commercial Real Estate
As previously mentioned, there are many investment strategies and ways to answer the question how to make a lot of money in real estate investing. So far, we’ve discussed how to make money from residential real estate investment properties. However, these are not the only ones for property investors to consider! Investing in commercial real estate means the real estate investor rents out an investment property to businesses (not residents). Obviously, since businesses generally generate more income than individuals, commercial real estate investment properties yield higher income and return on investment. Thus, if you’re wondering how to make a lot of money in real estate investing, consider commercial real estate!
How to Make a Lot of Money in Real Estate: Fix-and-Flips
The fix-and-flip investment strategy works as follows: the real estate investor buys an income property below market value (for being a foreclosure, short-sale, or in a bad condition and in need of repairing), and then works on improving this investment property and selling it for a price higher than the initial investment, thus making an instant profit! This investment strategy of how to make a lot of money in real estate investing is widely spread across the US real estate market due to the increasing numbers of foreclosures which property investors could buy for a cheap and sell for a high price.
Related: 6 Strategies for Buying an Investment Property Low and Selling It High
How to Make a Lot of Money in Real Estate: Real Estate Wholesaling
All the previously mentioned investment strategies require a real estate investor to own an income property to make money. However, if you’re wondering how to make a lot of money in real estate investing without property ownership, there are two ways, the first one being real estate wholesaling. Basically, a real estate wholesaler works as a middleman between property buyers and property sellers in a real estate transaction. All the real estate investor has to do is to find a seller, assign the investment property to a contract, and sell the contract to an end-buyer after which he/she walks away with a portion of profits made. Real estate wholesaling is one of the best ways of how to make a lot of money in real estate.
How to Make a Lot of Money in Real Estate: REITs
The second investment strategy to make money without property ownership is investing in real estate investment trusts. REITs are the best when asking how to make a lot of money in real estate passively. With this investment strategy, a real estate investor buys shares of a REIT that invests in multiple investment projects. Forget about the hassle of becoming a landlord, dealing with tenants, and collecting rent! Investing in REITs provides a real estate investor not only with passive income, but also with a diversified investment portfolio!
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Final Words on How to Make a Lot of Money in Real Estate
As you can see, learning how to make a lot of money in real estate is actually not that difficult! However, you should keep in mind that although there are numerous investment strategies to choose from, what works for one real estate investor doesn’t necessarily work for another. To determine which the best investment strategy for you is, you’ll need two things: real estate education and an investment property calculator. Fortunately, Mashvisor has both!
Continue reading our blog to learn more about all aspects of real estate investing, and sign up for Mashvisor to make use of our investment property calculator and start looking for and analyzing the best investment properties in your city and neighborhood of choice!
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