3 Ways You Can Make a Ton of Money as a Real Estate Investor – The Motley Fool

Investing in real estate may be a new concept for you. If so, you should know that it’s an avenue worth exploring. There’s lots of money to be made in real estate — especially if you go the following routes.

1. Buying short-term rentals

The COVID-19 pandemic has changed the way a lot of people travel. Over the past few years, the popularity of short-term rentals has increased as travelers have grown to prefer space and privacy over the amenities hotels commonly offer.

This gives you a prime opportunity to make money as a real estate investor. If you’re able to find affordable vacation rentals to scoop up, you might manage to generate a solid amount of revenue — especially if you target properties located in areas that enjoy a nice amount of tourism all year long.

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And if you don’t want to do all of the work associated with managing short-term rentals, you don’t have to. Just hire a property management firm to do it for you. Doing so could turn your rental into a true source of passive income.

2. Flipping houses

Flipping houses can be a risky endeavor — if you go in blindly and don’t know what you’re doing. But if you scoop up homes at the right price point and find ways to renovate affordably, you can make nice money in the house-flipping business.

Just as importantly, flipping houses often means tying up capital in properties for shorter periods of time, whereas when you own income properties, that generally means having money tied up in them for many years. That could give you more flexibility and allow you to jump on different investment opportunities as they arise.

3. Holding REITs in your portfolio

Owning or renovating physical properties isn’t the only way to make money in real estate. Another solid option? Buying REITs, or real estate investment trusts.

If you’re going to go this route, prepare to hold your REITs for many years. That way, you’ll give your shares time to appreciate in value.

Furthermore, one of the greatest benefits of holding REITs is getting to collect dividend payments. REITs are required to share 90% of their taxable income as dividends, so they commonly pay more than your typical stock. That’s money you’ll have the option to reinvest over time and grow into even more wealth.

Of course, you’ll want to choose your REITs carefully for maximum gains, so look to companies with solid growth potential. You may want to focus on businesses that operate industrial space, since that area is booming and has the potential to explode in the coming years as consumers increasingly make purchases online. There are also plenty of other REIT sectors you can look at.

It’s more than possible to make a lot of money by assembling a portfolio of quality stocks. However, it could pay to look outside the stock market and dabble in real estate. Whether your comfort zone is owning properties, flipping houses, or buying REITs, there’s a world of opportunity you shouldn’t pass up.

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