7. Flip Houses For a Living
Everyone understands the basics of flipping houses—buying a fixer-upper, renovating it to “force equity,” and selling to a homebuyer. However, it requires skills like finding great property deals and negotiating with contractors before considering renovation. It also demands managing contractors, navigating permits, understanding which improvements add value, working with lenders, and grasping the local market.
Still, flipping keeps investors capitalized through frequent payouts while rentals build cash flow and appreciation over time. Some flippers get their real estate license for MLS access, but it may not be worth the headaches of exams, brokers, and disclosures unless you plan to work in real estate professionally.
8. Invest in Land
Land comes with its own advantages beyond not having to maintain any physical homes.
Like mobile homes and parks, land isn’t sexy, so there’s less competition. That leaves higher potential returns for investors, often over 100% on any property.
You also don’t have to hassle with wayward tenants or hear the line “Check’s in the mail!” ever again.
If you’re interested, check out this land investing case study and the REtipster land investing course. Seth Williams is one of the country’s top land investing teachers and investors and teaches in an easygoing, friendly style.
9. Buy Your Own Commercial Real Estate
You can, of course, buy commercial properties, ranging from humble corner stores to towering skyscrapers.
Commercial property types include:
- Office Space
- Apartment Buildings (any apartment building with five or more units is classified as commercial rather than residential property)
- Retail Space (shopping malls, strip malls, etc.)
- Restaurant and Bar Space
- Industrial Space
Commercial real estate properties don’t have the same tenant-friendly laws as residential real estate does (except apartment complexes). You don’t have to worry about anti-landlord laws or absurdly strict rules — if your commercial tenant defaults or breaks your lease agreement, you can reclaim your property much faster.
10. Self-Storage Facilities
Self-storage units are as close to recession-proof as investments get. When the economy declines, people downsize and need places to store their extra belongings.
Self-storage also has a great business model – the buildings are essentially garages split into cubicles, requiring minimal construction and maintenance. You can automate access and have low management headaches.
If renters don’t pay, you give notice and remove their items, avoiding lengthy evictions. This makes for a straightforward income stream. If interested but lacking funds, consider investing in a self-storage real estate syndication.
11. Fractional Property Ownership
You can, of course, partner with a real estate investor in a joint venture. For instance, you find an experienced investor and offer to pitch in 20% of the purchase price for 20% ownership. You get to invest with less capital and potentially invest passively as a silent partner.
But you have to find trustworthy partners and negotiate the terms of your partnership. That could prove a challenge if you don’t know any real estate investors.
As an alternative way to make money with real estate, consider real estate crowdfunding platforms that offer fractional ownership. For example, you can buy fractional shares of rental properties on Ark7, Lofty, and Arrived. You can buy fractional shares in a property for $20-100 and still get the full rights and privileges of ownership, including landlord tax deductions. Several of these platforms offer short-term vacation rentals in addition to long-term rentals.
In fact, Ark7 and Lofty even offer a secondary market for buying and selling shares at any time. That means they come with full liquidity, unlike buying entire rental properties yourself.
You collect rental income while you own the property and get a hefty paycheck when the property sells or when you decide to sell your shares. Many passive investors find it one of the best ways to make money with real estate and certainly one of the easiest.
How to Make Money in Real Estate: Invest Indirectly
You don’t have to buy properties directly to invest in real estate.
In addition to buying properties, I indirectly invest in real estate through most of the following strategies.
12. Real Estate Syndications
In a real estate syndication, you typically become a silent partner on a large commercial building deal.
It works like this. An expert real estate investor — the syndicator — finds a good deal on a commercial property such as an apartment building. They don’t have enough money to buy the property themselves, so they raise money from partners. The partners usually authorize the syndicator to oversee the deal and manage the property, so the syndicator makes most decisions even though they’re a minority shareholder.
In exchange for their labor, they get a bonus structured into the deal.
As such, real estate syndications offer a (relatively) affordable way to invest in large commercial real estate deals. The minimum investment is typically around $50,000, on par with a down payment on a rental property. But the upside is high potential returns, often 15-20%+, with no labor on your part.
We invest in syndications alongside members of our Co-Investing Club. For every deal, we propose a passive group real estate investment deal, and any member who wants to invest in it can do so with as little as $5,000 — a tenth of the usual minimum.
Then, we sit back, relax, and enjoy the quarterly or monthly income from distributions and the tax benefits like depreciation. We collect passive income, even as we get to show a loss on our tax returns. When the syndicator finishes renovating the property and stabilizing rents, they sell it for a huge profit.
Are you starting to see why I think it’s the best way to make money with real estate?
13. Publicly-Traded REITs
A real estate investment trust (REIT) is a company that either owns a real estate portfolio or lends money secured against real estate.
They trade on public stock exchanges, so you can buy and sell them instantly. That makes them liquid investments, unlike most types of real estate investments.
It also makes them volatile, and share prices correlate far too closely with stock markets for any meaningful diversification.
However, the greatest strength and weakness of public REITs stems from how the SEC regulates them. The SEC requires REITS to pay out at least 90% of all yearly profits to shareholders as dividends. That creates high dividend yields but leaves these funds with little prospect for growth, making it hard for REITs to reinvest profits in new properties.
This is precisely why I opt for private REITs over public ones.
14. Private REITs & Funds
Some real estate crowdfunding platforms offer private REITs and funds that own or lend against properties. Unlike public REITs, you can buy shares directly from the platform. This offers diversification and less volatility compared to stocks. Also, private REITs can reinvest profits rather than pay high dividends.
Unfortunately, some platforms only allow accredited investors due to SEC regulations. But others do allow non-accredited investors.
My two favorite private REITs are Fundrise and Streitwise. Fundrise focuses on residential real estate, while Streitwise buys commercial office buildings. Both allow non-accredited investors, with minimums as low as $10 for Fundrise and $5,000 for Streitwise, which has delivered an average 7.3% dividend yield since 2020.
15. Crowdfunded Real Estate Loans
Private REITs aren’t the only way to make money with real estate crowdfunding investments.
Another model involves funding loans secured by investment properties that are being renovated. When the property sells or is refinanced with BRRRR strategy, the loan is paid off, and you get your money back with interest. If the borrower defaults, the lender can foreclose to recover the money.
My favorite for crowdfunded loans is Groundfloor.
Investors can make money with Groundfloor by funding loans with as little as $10.
This makes diversification easy by spreading money over many loans. Unlike most real estate investments, Groundfloor loans are short-term, usually 6-12 months.
You can also invest in funds and own pools of real estate loans. Some offer liquidity, letting you withdraw anytime. For example, Stairs by Groundfloor and Concreit pay 4-6% interest and allow withdrawals anytime. Although the returns are lower, interest from crowdfunded loans is a more flexible passive income than most real estate options.
Not only that, investing in crowdfunded loans is one of the easiest waysto make money in real estate.
16. Private Notes
No one says you have to go through a third-party loan platform to lend money to other real estate investors.
I’ve written private notes (provided loans) to real estate investors I know and trust. They pay me interest quarterly, at 10% annual interest, and the loan term is open-ended.
But you can structure your loan however you want. You negotiate the interest rate, the loan term, and the repayment terms. If you want, you can record a lien against the property for collateral so you can foreclose if they default.
Word to the wise, however: only lend a private note to experienced real estate investors you personally know and trust. The foreclosure process is even more expensive and time-consuming than the eviction process.
17. ETFs & Mutual Funds
Want to invest in real estate through stocks?
Some exchange-traded funds (ETFs) and mutual funds specialize in real estate or in industries with primary exposure to real estate components. For example, you can invest in homebuilder ETFs or home improvement retailers like Home Depot and Lowes. For that matter, hotel and hospitality companies own plenty of real estate.
While ETFs offer great liquidity, and you can easily invest in them through your tax-sheltered retirement accounts, they tend to move in strong correlation with the stock market at large. That limits their diversification value.
18. Private Equity Funds & Opportunity Funds
Another investment to make money on in real estate is by buying into private equity funds or opportunity funds.
Private equity funds invest in, you guessed it, private companies that don’t trade on stock exchanges. These companies can include real estate businesses.
Opportunity funds invest in real estate in Qualified Opportunity Zones, typically low-income areas. Designated by the IRS, real estate in these opportunity zones offers special tax advantages. For high earners, investing in qualified opportunity funds can provide valuable tax breaks.
Unfortunately, many private equity funds and opportunity funds only allow accredited investors to participate.
