4 Ways To Make Money In Real Estate Investing

  1. Online Real Estate Investing Sites
  2. Lease With an Option to Buy
  3. Option a Property
  4. Sell Wholesale

Before I get started, let me say I am only going to give an extremely basic explanation of these ideas. 

I could easily write a book on each one alone, but here are the bare bones to investing with no money or credit. Here’s another great read from Jeff on the best short-term investments out there, so check it out as well!

4. Sell Wholesale

A fourth way to make money in Real Estate actually can require the investor to have cash, although it is not required. 

This technique is by far the best and easiest way for new, inexperienced investors to make “quick” money in Real Estate. In fact, this is by far the best and easiest way for veteran and seasoned investors to make “quick” money in Real Estate.

Wholesaling is the art, and I use that word on purpose, of being able to accurately appraise the potential value of a property and buy it so low, you can quickly sell it for cash to another rehabber or end user who will make it their dream home, without EVER fixing a thing, regardless of how good or poor the condition of the property.

Now, you may say, I do not need cash for this strategy.  I can simply Option the property for a wholesale price and then sell it to a rehabber or end-user. You are absolutely correct, but getting an owner to accept a wholesale price is rare. 

You will make 100 wholesale offers to owners before one is accepted. 

Where you will have much better luck is buying foreclosures from banks.

While a majority of your initial offers will still be rejected by banks, they are much more likely to accept a wholesale offer. They also will never allow you to Option the property. They only accept cash and will even require you to have Proof of Funds before they even look at your offer. 

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3. Home-renovation flips

The fix-and-flip culture has exploded. Thanks to the popularity of home renovation shows, we’re experiencing a massive boom in the traditional renovation flip market. While there can certainly be a lot of money to be made here, navigating these waters in the beginning can be tricky. When you lack the knowledge or the experience, you could find yourself on the losing end if you don’t select the right home.

Matt Larson has flipped more than 2,000 homes in Iowa and Illinois. Over the course of that time, he’s learned some lessons on what to look for and what not to look for when flipping a home with a renovation. His advice? Go after the ugliest homes in the nicest neighborhoods. That’s where the real value is. The other difficulty here is not only finding those homes when you’re not well-networked with real estate agents, but also understanding your after-repair value.

How much will the home be worth once you’ve invested in fixes and repairs? To accurately determine that, you need a strong relationship with a general contractor and an on-site tour of the property. While buying site-unseen at an auction might seem alluring, unless you really know what you’re doing, you could lose money. However, making money on a home-renovation flip can be rather straightforward — as long as you understand the underlying costs and potential value.

John and Julie Wakefield, a husband-and-wife flipping team who’ve done hundreds of flips, say something similar. They advise not to bite off more than you can chew, and more importantly, you should look for creative ways to help others. Success as a real estate investor has as much to do with how creatively you can solve problems as it does how well you can crunch the numbers. 

Related: Buy a Rental Property Before Year-End: Why and How

Avoid Walls

The average internet real estate prospect wants to browse your site without giving up their life history. Provide local real estate and community information in abundance and without requiring a log-in in or an email address, or you'll watch your future clients go to another site.

Reasons to invest in a real estate website

Your business success is rooted in the way you set up. Hence, if your real estate company is still in the “brick-and-mortar category, then it’s high time for you to go online.

There are many numerous reasons for splurging on building a real estate website:

  • attracting potential clients;
  • staying ahead of competitors;
  • getting more brand recognition;
  • upgrading a business level;
  • saving on marketing and promotion.

In this abstract, we’re going to shed light on creating a feature-rich and engaging site – the one that will take your real estate business to a new level.

If you read up to the end, you’ll learn what it takes to elevate a powerful online presence for a property business and how much real estate website costs. 

2. Airbnb and Vacation Rentals

For those who want to invest in a property but still retain flexible access to their home, rentals can present a lucrative path to profits and one of the fastest ways to make money in real estate. 

Not only can you make some side hustle income from vacation rentals, but you could potentially make a significant amount of money and build up a substantial passive income stream if you’re in a highly-trafficked tourist locale. 

Places like San Diego and other tourist hotbeds are well known for having a high demand for these short-term rentals.

There are plenty of platforms you can use to promote your short-term rental property. List your home on websites like Airbnb and Vrbo. Be sure to take good photos and go above and beyond in making your guests’ experience a memorable and comfortable one. You can also hire a vacation rental company to help you manage your property and bring business. 

Investment properties (rental real estate)

The most obvious way to make money in real estate is to buy an investment property (or several). You could buy a home and rent it out to long-term tenants or purchase a multi-unit rental property or small apartment building. You could look into buying a vacation rental or a property you intend to otherwise rent short term. Or you could buy a commercial property (any type of property that is not residential real estate), such as a retail or office building, and lease it to tenants to generate rental income.

Buying an investment property can be a great way to make money in real estate, but it isn't without its drawbacks, and there's quite a bit to learn before you get started.

Make Money Blogging with Sponsored Content

Sponsored content is exactly as it sounds. You partner with sponsors who pay you to promote their products or services on your blog.

If you have a product or service you think your readers would find useful, you should reach out to the business and offer to write a post about their product or service for a fee, usually a few hundred dollars. Naturally your post will include a plug for the company, and a thank you to them for sponsoring the post.

Before you think, “I’m not a professional writer; no one’s going to pay me to write a post,” note that this is much more about the visibility it provides the vendor than about your skill as a writer. For that reason, the vendor may want to see statistics on your blog’s views and the number of subscribers before agreeing to pay a few hundred dollars. Be prepared to share your numbers. And note that the larger your audience, the more you can charge.

And if your blog gets big enough, you’ll have companies reaching out, offering to send you ready-to-publish articles and paying you a small fee ($20-$50) to publish them! While I don’t like to crowd my blogs with too many of these, they provide a couple hundred dollars each month.

There are a few things you want to be aware of when using sponsored posts to monetize your blog:

  • Only write sponsored content for products, services, and vendors you actually use, or you would recommend to your family and closest friends.
  • Be honest, even about small downsides! Readers respect reviews that include a negative or two because it indicates that the reviewer isn’t completely biased. Just let your sponsor know what to expect ahead of time.
  • You must legally disclose at the beginning of the post that this is sponsored content, for which you were compensated.
  • Compensation may not always be money. You can negotiate for a free product or service in lieu of cash. My first-ever sponsored post for my first-ever blog was for a custom, at-home teeth whitening system. Instead of cash, I received the $199 system for free so I could try it and write about it.

Real-World Example of Sponsored Content

There is no shortage of potential sponsors in the real estate sector.

Perhaps you recently had a great experience with a roofing company. They may want to sponsor a post all about the Do’s and Don’ts of replacing a roof.

Or maybe you’re planning a move, and you need movers. Reach out to movers you (or someone you trust) has used before, and ask if they would be interested in providing you with a gratis move so you can write a review of their service on your blog.

Just think about all the vendors homeowners use, the services they provide, and how you can pair a vendor with a useful blog topic to serve your audience.  

1. Long-term residential rentals

One of the most common methods for making money in real estate is to leverage long-term buy-and-hold residential rentals. People will always need a place to live, and that means getting involved with rental properties. You need to do the proper amount of due diligence to source your property by keeping three principles in your mind: location, location, location.

Yes, you’ve heard it before, but location is everything when it comes to real estate. Not only does this apply for actually an increased asset value over time, but also in your ability to quickly rent that property to a long-term tenant. When you’re considering long-term residential rentals, look for a great location. That’s more important than the current state of the property itself. In fact, run-down homes in great locations are one of the best investments you can make.

This involves a more traditional approach to making money in the real estate market. It means buying a property with some cash on hand to make a down payment and then holding that property for the long term. Depending on your personal situation, you can easily grab that property for a very low or even no down payment. That’s especially true if this is a pre-existing, income-producing property.

If there’s positive cash flow in a residential rental, then it could be a great investment. However, you’ll likely not find that too easily, unless the current owner is unloading for personal reasons due to a divorce or other need to liquidate that property that necessitates having some cash on hand.

1. Increasing Property Value

The most common way to make money in real estate is through appreciation. Appreciation is when a property grows in value.

You might purchase a property for $400,000, and over the course of 10 years, it appreciates to a value of $500,000. Sell the property, and you’ll have profited $100,000.

Most properties tend to appreciate, and that’s why real estate is such a popular industry for investors. There’s an excellent chance that your property will eventually be worth more than what you bought it for.

Let’s talk about land first. “Land” is any property that has few or no existing structures. Land tends to appreciate for two reasons:

  • Development: Land may appreciate if you construct a house or commercial building. Or you could refurbish structures that are already on the land.

  • Natural Resources: If you discover gold or oil on your land, it will almost certainly skyrocket in value. You can also sell land rights to companies that wish to harvest resources off your land—typically, you can earn a percentage of whichever resources are collected.

Residential and commercial properties appreciate for three main reasons:

  • Location: This is the main reason residential properties appreciate. Properties are more likely to grow in value if they’re located by schools, commercial centers, scenic areas, or popular destinations.

  • Development: A property will appreciate if the surrounding neighborhood sees new developments or redevelopment (but a property may also decline in value if the neighborhood decays).

  • Improvements: A property may appreciate if significant building improvements are made. This is the main idea behind fix-and-flip investing.

Inflation in Property Value

Inflation in Property Value

Don’t forget to account for inflation—how prices increase over time. Inflation will cause your property to be a little less profitable than what you’re selling it for.

For example, your property may have appreciated by $200,000, but the average home price may have increased by $70,000 over the same period.

Keep this in mind when you’re trying to calculate your returns on a prospective property.

Drawbacks of Digital Real Estate Investing

While there are many benefits of investing in digital real estate there are also a couple of drawbacks. I’ll explore the most common below.

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Volatility

Digital real estate can be volatile under certain conditions. Because many websites rely on certain acquisition channels, if something were to happen to these channels, your income could suffer.

The most common reason websites suffer is from algorithm changes by Google or social media sites. If an algorithm change is deployed, you’ll be tasked with understanding what reasons impacted your rankings or impressions. This can be quite difficult and frustrating for many website owners.

The takeaway here is to use several acquisition channels in case that one suddenly drops.

Skills Needed

Unless you are going to invest in digital real estate passively through a third party, you’ll need certain skills (more on this below!) to grow your income and assets. This can leave some investors on the sidelines.

There are many resources you can use to learn about digital real estate. For example, if you want to start a blog to make money, check out the video below!

Successful real estate websites

Le Hameau Du Renard Blanc

Le Hameau Du Renard Blanc
Le Hameau Du Renard Blanc

Features to note:

  • amazing video backgrounds;
  • smart, clean navigation with a simple menu and smooth transitions between pages;
  • micro-interactions;
  • immersive property photography;
  • minimal content;
  • stylish modern design with clean photography;
  • simple reservation process;
  • an embedded Google map.

Urban Splash

Urban Splash
Urban Splash

Features to note:

  • search with predictive results;
  • the subscription form;
  • a user-friendly get-in-touch area in the footer;
  • a simple buy-or-rent form in the top bar;
  • separate pages for property projects with video sections, and CTAs;
  • documents and brochures available for a download;
  • the “About Us” page with “Meet the team” and “Testimonials” sections;
  • numerous social buttons to share the content.

Caledon Build

Caledon Build
Caledon Build

Features to note:

  • out-of-the-box navigation;
  • creative photo sliders;
  • an Instagram feed integrated into a web design;
  • the laconic and informative “Team” page;
  • light non-obtrusive animation effects;
  • magazine-style project pages with professional images and detailed descriptions;
  • the Blog page.

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