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8 Alternative Ideas To Earn As A Real Estate Investor

Real estate is undoubtedly a very lucrative industry and is behind most of the world’s wealth creation. This is because real estate increases in value over time. Thus, many people have made money by investing in it. This is possible for you, too.

Now, entering the real estate investment scene doesn’t have to be toilsome. Nowadays, you don’t even have to be a property owner to be an investor. Besides, rental property isn’t the only way to make money in real estate, even though it’s the most common pathway. You can get involved in it in many ways; you only need to know how to spot excellent investments. 

Because you’re investing in real estate, remember to start with long-term goals in mind. That said, here are some alternative ideas to earn as a real estate investor:

  • Fractional Real Estate

This is a unique approach to real estate investing but is simple to understand. What happens here is that a company could build or buy a commercial or residential property. Then, it divides the property cost into fractional shares of real estate. They then make these shares available to investors like you, giving you a ‘piece’ of the property.

The number of investors is indefinite. Yet once you become a shareholder, you’ll be receiving rental cash flows based on your owned shares.

  • Renovation Flipping

If you have a slight interest in real estate, you may have come across flipping shows on television. The basic idea of flipping houses is buying low, renovating, and then selling high. This may sound straightforward, but it isn’t always the case.

The trick here is to buy the right house in the right neighborhood. Perhaps you may need the eyes of an expert to help you identify which ones to buy and avoid. As an investor, you must consider the return on investment. The after-repair value determines your profit. So, as much as possible, look for houses to flip in more vibrant neighborhoods. That way, it’s easier to sell the renovated house for a better price.

  • Land

The land is a versatile asset. You could either sell it as is or build a property on it. If you plan on erecting a building or a property later, you could buy land and let its value appreciate. Location is also an important determinant of value, especially if you plan to erect a high-value luxurious property. Once the value is high enough, you can resell the land for a profit.

Alternatively, you could then erect a house or commercial building. Plus, companies could even rent your land for production. You could also build other structures that may add value to the land, such as pipelines, access roads, and cell towers. Remember, though, that no matter what you wish to build or erect on that land will depend on the rights you have over it.

  • Lease To Buy

Exercising lease options allows you to get involved in real estate investment without committing significant initial capital. When you lease with an option to buy, you give yourself time to let the property value appreciate. Then, when the property market has risen to a point, you could then exercise this option to buy the property at a discount. Therefore, the lease to buy is a perfect choice if the real estate market is doing well, or when there is a bullish market. Otherwise, you could sell your rights to purchase to somebody else and turn a profit. 

The great thing about the lease to buy is that it’s an option, not an obligation. You don’t have to buy it, but you have the option to, so the power rests in your hands.

  • Vacation Property Rentals

If you have an extra property or space in your house, you could just put it up for vacation property rental. This is an excellent way to get extra money and is ideal for people who own properties in high-traffic areas.

Tourism is booming in many parts of the world, and so is the demand for vacation accommodation. People now know that it’s cheaper to book one than to check in at a luxury hotel or lodge. Thus, it only makes sense for a real estate investor to convert an unused property into a vacation rental. It’s a more flexible income stream than short- or long-term rentals. Even so, this can be a lucrative passive income flow for you. 

  • Real Estate Investment Trusts (REITs)

REITs are an indirect form of property investing. Here’s how they work: Companies that own multiple commercial properties sell several shares to investors to raise more capital. The purpose is usually to expand the empire by buying more properties. Then, the shareholders get a percentage of the rental income as their monthly, weekly, quarterly, or annual distribution. The REIT is the landlord over the commercial tenants. As such, recorded income will only be after considering the operating expenses.

  • Mortgage Investment Corporations

These differ from REITs in that they invest in the private mortgage, not the underlying property. They hold on to the mortgages and then transfer the interest payment to various investors. The interest payment here is the investment income, so it’s not exactly what you call a real estate investment. It’s a derived property investment and, more accurately, a debt investment. Despite that, you can still make good money from this.

  • Contract Flipping

Contract flipping is another way of making money in real estate at a low cost. It essentially entails transferring the rights to purchase contract to a different buyer. All you need to do here is find a distressed seller and a willing buyer. Once you do, bring them together to discuss what you have in mind. This means less risk on your plate. You’re effectively just the middleman between two parties, and that’s what your role will be.

The tricky part about this type of flipping is finding a distressed seller. You could start by trying to find buyers and sellers beforehand to avoid complications. To find distressed sellers, you may focus on vacant houses or owners falling behind on their mortgages. It’s not an easy task, but everything is possible if you have market information and reliable sources.

Conclusion

You don’t need loads of capital to be a real estate investor unless you’re looking into enormous projects. However, if you’re a beginner, there are options you can partake in to enter the industry without breaking the bank. You only need to understand the industry and the various investments to make money from them.

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