Ninety percent of millionaires around the globe use real estate to build wealth, according to Andrew Carnegie, among the wealthiest persons in American history. Whether you are a new investor looking for ways to make passive income or a skilled investor seeking to diversify your holdings, real estate is a good choice.
Contrary to popular opinion that real estate requires tons of money upfront and hard work, it is not always the case. There’re new real estate investment options that neither need significant financial resources nor management of physical assets. When you choose the right investment, you can make millions out of real estate.
Read on to learn five ways to earn profit in real estate in 2023.
1. Invest in Real Estate Investment Trusts (REIT)
If you are wondering how to invest in real estate without buying property, REITs are ideal. You profit by investing in enterprises that own and manage income-generating real estate assets. These companies pay dividends to investors, making REITs an excellent passive income source for people who don’t have the time, willingness, and resources to manage physical properties.
REITs stand out among real estate investments due to their regular income, less risk, liquidity, and strict regulation. Their dividends are higher than regular companies because the law requires them to pay 90% of taxable income to investors.
REITs have an impressive capital appreciation, thus an excellent strategy for investors who want to expand their investment horizons outside traditional stocks and bonds. There’re numerous ways of getting a share of the REIT pie, including equity, mortgage, and hybrid REITs.
2. Rent Out Property
The classic way of earning profit in real estate is renting out property. Besides the conventional way of purchasing rental property, you can rent out an unused room in your home, a secondary residence, or an inherited property you don’t want to sell.
The most significant advantage of this investment type is that people will always need somewhere to live, so the investment is viable. In fact, renters occupy 44 million housing units in the US. Also, depending on your preferences and financial capacity, you can opt for residential, commercial, and vacation rental properties.
Rental real estate provides recurring income, equity, tax benefits, hedge against inflation, investment diversification, and flexibility to sell when needed. If you don’t have the time, resources, and willingness to manage the rental property, you can hire a property manager to handle the property’s operations, including dealing with tenants.
When investing in rental property, finding the right property is paramount. Location is crucial, and you want an area with high demand and low supply, proximity to amenities, appreciating property values, reasonable taxes, and safety.
A good neighborhood has high odds of quality tenants and revenue. Remember to consider financing and understand rental laws for a good landlord experience.
3. Consider House Flipping
Home renovation shows have contributed significantly to the growth of house flipping. House flipping involves buying real estate property, upgrading it to increase value, and selling it for a profit.
Many people shy away from house flipping due to the risks involved. However, while it may be risky, it can be equally rewarding, and people have made millions from this real estate investment. In fact, home flips can earn you a gross profit of $62,000 when done correctly.
The secret in home flipping is considering a property’s location, repair needs, and cost. For instance, while you can refurbish an eyesore into a beautiful abode, you can’t change the neighborhood. As such, you must choose a property in a good locality to increase its resale value and profitability.
Successful flippers also pay attention to a home’s condition, and working with a professional inspector is handy. Handling minor issues is easier and less costly than extensive structural problems. In addition, hire reputable professionals to help with repairs and have a plan B –you can rent the home instead of selling if home prices plummet.
4. Buy Your Own Home
Many people do not consider buying a home as a real estate investment. Nonetheless, it is an excellent way to invest in real estate, and you make money in several ways. First, a primary residence increases in value over time, offering a financial windfall upon sale. Most homes’ value increases with time -3.5%-4% annually.
Second, people looking to purchase homes have tons of financing options. If you want to invest in real estate without money, you can access financing through many lenders and institutions such as banks, government loans, microloans, and home equity loans. Since the home acts as collateral for the loan, you can get reasonable rates.
Third, buying a home has equity benefits. Instead of rent, you pay mortgage premiums and attain equity. Sometimes, a mortgage payment may be lower than paying rent, saving you money. Third, home buying offers greater financial stability, with homeowners having a 40 times more average net than renters. Additionally, you enjoy tax breaks on property tax and mortgage interest.
5. Try Online Real Estate Investing Platforms
If you want to invest in real estate without purchasing property, online real estate platforms are a good choice. In most platforms, you invest in huge property deals with other investors as a crowdfunding effort. As a result, you may get attractive deals without plucking millions of dollars. Also, investors access investment opportunities they would otherwise not get.
Digital real estate investment platforms are a simple and low-cost way to earn the industry’s historically exceptional returns. You earn money through capital appreciation and dividends.
Other benefits include;
- Access to multiple real estate investments
- Opportunity for diversifying the portfolio
- Low investment thresholds
- Passive income potential
Real estate is a good investment with solid returns, appreciation value, and long-term financing opportunities. You have many options beyond the traditional options, like buying property and becoming a landlord, and you don’t need hundreds of thousands in your account.
If you are looking for profitable ways to earn profit in the burgeoning real estate industry, this article is handy.