The US housing market is red hot with prices having gone up year over year for the last 7 years. That reality has meant tremendous opportunity for those savvy enough to put their money and time into the real estate market.
But what if you have no desire to be a “real estate agent”? Are their still ways to make money in real estate?
There are tons of ways investors can make a living off of both residential and commercial properties without ever needing to brandish the title of “agent”.
Below, our team of real estate enthusiasts shares some of the most lucrative strategies you should consider pursuing in the new year!
1. Buy and Hold Rental Properties
Rentership is way up in the United States with more people sitting in rental units today than at any other point in the last 50 years! If you can buy property and offset the cost of holding onto it by renting it out, not only will you pay down your mortgage without touching your pocketbook, you may also turn an immediate profit!
We recommend multi-family dwellings like duplexes or triplexes for beginners looking for useful real estate advice and easy wins.
If you’re feeling bullish, you can also try to purchase commercial properties that feature 5 or more units.
2. Fix and Flip
Fixing and flipping is one of the most commonly referenced ways to make money in real estate. This is probably due to the media craze that surrounds the process.
For those that are unfamiliar with fixing and flipping, it entails buying houses at cut rates that need work, doing the work, and then selling the home for a profit.
A successful flipper will typically abide by the 70% rule which says that you should never buy a property for more than 70% of its market value minus repair costs.
If you can stick to that rule and find lots of properties in need of TLC, you can make a killing!
Wholesaling real estate is the simplest means of getting involved in the market since it requires no personal investment. As a wholesaler, you’ll cut rock bottom deals with property sellers, get the deal in writing, and then sell that deal to a buyer plus your “finding fee”.
Being a successful wholesaler requires you to have a good way of finding property leads and will also require a strong ability to negotiate prices.
If lead building and haggling come easy to you, this “ways to make money in real estate” avenue could be a perfect fit.
4. Hard Money Lending
A lot of people (particularly investors) that want to buy property and don’t qualify for conventional home loans turn to hard money lenders to get their property purchases funded.
Hard money lending means shorter pay-back periods and higher interest rates. That’s good news for you as a lender because you’ll make more money on the dollars you lend and will get your money back fast (typically in 3 years at the longest).
Hard money is also helpful to borrowers because lenders scrutinize buyer’s plans less than traditional banks would.
As with all lending operations, you’ll need to have cash to loan and you’ll also need to be comfortable with assuming the risk that borrowers may default on payments.
5. Invest in REITs
If you don’t have enough money to buy a property outright, you can throw the money you do have into a pool with other investors and purchase portions of properties. This form of pool investing is often carried out in the form of a “real estate investment trust” (REIT) which you can invest in like you would any other stock.
REITs have lower levels of volatility than you’d experience investing in most US companies and their rate of return outpaces inflation by about 4%.
6. Buy Notes
When lenders finance a mortgage, they hold the deed or “note” to the property which borrowers progressively pay for over the course of 15 to 30 years. What many investors don’t know is that you can buy these notes off of lenders and start collecting borrower’s monthly payments for yourself.
Some note holders could sell notes at a discount because they want a lump sum of money rather than paced payments. Others may sell notes at a discount because borrowers are behind on payments.
In any case, for the savvy investor, note buying can be a “ways to make money in real estate” best-kept secret.
7. Property Management
If you’re looking to build a business around real estate that doesn’t require any investment on your part and can generate consistent, safe income, consider property management.
As a property manager, you’ll manage the day to day needs of rental properties on behalf of the property owner. In exchange for your services, you’ll typically collect anywhere from 5% to 12% of a property’s monthly rent.
Property managers are in charge of duties like finding tenants, managing tenant requests, dealing with evictions and more so be aware that property management is an active job. If you’re looking for passive ways to make money in real estate, you’re better off going with one of our other suggestions.
Wrapping Up Ways to Make Money in Real Estate Without Becoming an Agent
As you can see from the list above, there are no shortage of ways to make money in real estate if you should choose to forgo the role of an agent.
Our advice is to keep seeking out information both online and off to find which niche speaks the loudest to you and start making deals!
For more of the best advice on how to grow and maintain your real estate business, check out more of the content we have at Small Business Brief today!