Real estate is a great way to make money. And the awesome thing about it is that there are many ways that you can get into real estate investing to enjoy the income that comes with it.
So I’m going to give a run-through of the10 ways you can make money with real estate.
Real estate agents make 2.5% of the final sales price as a commission for selling a property. Not only that, but you can also make money from a listing commission. By listing a property, you can get 5% which you can then split with the buyer side to close the deal.
Sometimes you might find someone interested in buying in an area that’s far from you. Well, if you know an agent who works in that area, you can refer that buyer to them. When they close on the deal, you get 25% of that agent’s commission. It’s a pretty sweet deal considering you didn’t do any work.
Wholesaling is when you get a property from a seller and put it under contract that you get the right to close the property at a certain price. Then you sell the equitable right to someone else.
Let’s say the seller sold you a $2M property for $1M. Then you sell that to the buyer for $1.1M. That $100,000 difference is the wholesale fee that you make from that sale.
Lots of people make tons of money flipping houses in the Bay Area. Basically, you close on a property, put in some rehab, then sell it for a higher price. Bam! You just made money.
Instead of selling a house that you bought and flipping it, you can also rent it out. Just make sure the rent will cover your monthly mortgage, property management fees, taxes, and fees.
With the internet, it’s easy to market something you have that’s very valuable. People sell $1,000 courses for something they know. There are actually some courses that are technical and contain a secret ingredient that others wouldn’t be able to find out on their own.
So if you have valuable real estate knowledge, you can create a course and sell it to those interested.
Some people don’t have the money to buy a property. This is where you can come in. You can lend them money and get tied up in the real estate either as a 1st position lender like a mortgage, or a 2nd position lender or gap funder.
You will get a certain amount of money as principal and interest, and money for originating the loan. In the worst case, if they aren’t able to pay you back, you can foreclose on the property to get back what you shelled out.
A syndication is a group of investors who pool in their money to buy a huge piece of real estate. Let’s say there’s a $10M property that needs $3M in down payment. One person putting in the $3M by themselves might be too much. But when you have more investors, each investor can just put in $50,000.
In a syndication, there needs to be a general operator or general partner who holds 20-30% of the equity while the passive investors’ side gets 70%.
Airbnb is another excellent way to make money from real estate and you won’t even need to buy the property. First, you approach a property owner to lease a property to you. You should let them know that you plan to Airbnb out their house. Then you can furnish the house to make it look nice then rent the property on Airbnb.
Doing Airbnb means that you can rent a bit above market rate than for long-term rentals. You make money from the difference between your lease with the property owner and your rental income from Airbnb.
The 10th way you can make money from real estate is by doing a subject 2 wrap. You start by taking over someone’s property including their mortgage payments. Then you find someone interested in buying the home.
You should sell the property for a higher down payment than what you paid to the old seller, and the buyer should also pay a higher monthly payment than the mortgage you pay to the bank. That way, you make money.
So that’s it, 10 ways that you can make money doing real estate investing. You don’t have to do all ten of them because you can choose which one works better for you.
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