If you’re working hard in your primary field, you may have little time or energy for side projects. To build your wealth quickly, you’ll need to find easy ways to earn a supplementary income that won’t detract from your existing responsibilities. For a money-making project that requires little hands-on work, investing is ideal.
Some types of investments are riskier than others, but the real estate market is a great place to start if you want consistent income and opportunities to diversify your portfolio. There are plenty of different ways to invest in real estate and they all have their respective benefits, so you’re sure to find something that suits your needs and helps you meet your goals.
If you’re interested in real estate, keep reading for a breakdown of some of the most common types of investments and how to get started. After you get a sense of the available options, you can decide which one is right for you.
REITs
If you’re new to the world of real estate investing, starting with REITs is a smart decision. REITs, or real estate investment trusts, are companies that own multiple commercial real estate properties. Investors can purchase shares of these companies and benefit from their earnings without taking on the risks of owning properties themselves. If you’re just starting out, this is one of the safest ways to invest in real estate.
Flipping Houses
Property ownership can be more lucrative than smaller investments, but it doesn’t have to be a long-term commitment. You can purchase foreclosed homes or fixer-uppers and resell them for a profit, which is called flipping houses. Oftentimes, you can get old or unfinished homes for lower prices and renovate them to match current trends.
Flipping houses does come with its share of risks. If you make a property purchase and then overspend on renovations and improvements, you could ultimately break even or lose money when you sell. You may also be stuck with the home for months or years if the housing market slows. Keep these potential problems in mind while considering this method, but know that flipping houses can be very profitable when done correctly!
Rental Properties
In contrast to the first two investment opportunities, rental properties provide long-term earnings and very little hands-on work. Before you decide on an investment, you should know about each type of rental property, its benefits, and its limitations. Here are brief descriptions that will help you differentiate between your options:
Single-Family Rentals
Single-family rentals are the ones that you likely think of first when you think of rental properties. These are residential properties that are rented out to tenants on a long-term basis. Property owners often serve as landlords and manage the property, tenants, and maintenance needs of their rentals. These rentals offer consistent monthly income if you keep them booked.
If you have trouble with vacancies or bad tenants, these rentals can be less profitable. Single-family homes won’t earn you any money without tenants and bad tenants can cause expensive damage. If you manage your tenants well and keep your property in good shape, they should offer you a nice secondary income for many years to come.
Vacation Home Rentals
If maintaining long-term tenant relationships seems stressful, you may want to purchase a residential property in a popular vacation spot and rent it out to short-term guests instead. Short-term vacation rentals can be listed on convenient platforms like Airbnb and VRBO and earn significantly more money than other rentals due to flexible nightly rates.
In addition to making money, your vacation rental can also serve as a vacation home for you and your family. It may seem frivolous to purchase a secondary property just for leisure, but when you convert it into a rental business during the rest of the year, it can all but pay for itself.
One possible downside to vacation rentals is that you will likely have to hire professionals to maintain the property if you live far away. If you finance your property purchase well, you can budget for these expenses more easily.
Multi-Family Rentals
If you’d like to invest in larger-scale rentals, multi-unit properties and apartment complexes are really lucrative options that function a lot like smaller rentals do. There will be more maintenance responsibilities and more complicated problems since you’re dealing with more tenants, but those numbers also have their own benefits.
With more units and tenants, a few vacancies shouldn’t pose a threat to your earnings. You’ll still earn money from other tenants’ rent to maintain a positive cash flow. While larger rentals are better options for experienced investors, they are great options for expanding your investment portfolio and converting your property investment project into a true business.
After reading about some of the most accessible and profitable real estate investment options, you should be able to find one or two that appeal to you. As you plan your next money-making move, keep these facts in mind and choose an investment that suits your resources and your goals.
