8 Ways To Get Rich in Real Estate Without Being a Landlord
When you think of making money in real estate, you might envision a landlord who owns a bevy of low-maintenance properties and effortlessly collects rent month after month from loyal tenants like a well-oiled machine. In reality, however, that type of income can come with more than a few headaches, including having to make repairs, find new tenants and take action when the rent isn’t paid on time. Fortunately, you have other options.
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Here are eight ways to get rich in real estate without being a landlord.
Wholesaling
Ed Brancheau, the owner of SunnyNest Homes LLC and seasoned real estate investor based in San Diego, said wholesaling is a strategic approach that requires identifying distressed properties available at a significant discount.
“Once you’ve identified these properties, you secure them under contract,” he said. “Here’s the catch: instead of purchasing the properties yourself, you find other investors who are interested in buying them. You then assign these contracts to those investors for a fee, typically around 5% of the final sale price. This method requires a keen eye for opportunities and strong negotiation skills.”
Hard Money Lending
“If you possess substantial capital, becoming a hard money lender can be a lucrative option,” said Brancheau. “Hard money lenders provide financing to fellow real estate investors who are looking to purchase and renovate properties. In return, you receive interest, which typically ranges from 8%-12%, along with points, usually totaling 1%-2% of the loan amount. It’s a passive way to participate in real estate deals, making your money work for you.”
Land Banking
“It’s quite like how it sounds,” said Bailey Moran, real estate professional and the COO of Austin TX Realty. “You buy land and wait. It’s the patience game. A decade ago, Austin wasn’t the booming tech hub it is today. A client of mine had this uncanny knack for recognizing future urban expansion zones. They would purchase plots in areas that, to the untrained eye, seemed desolate. Fast forward a few years, and voila! That ‘desolate’ land is now adjacent to the city’s shopping complex. This strategy doesn’t provide immediate returns, but the appreciation can be exponential in the long term. It’s capitalizing on urban sprawl and developmental trajectory.”
Real Estate Education and Coaching Services
Joseph Melara, the owner of Residential Brokers, said to consider sharing your real estate knowledge through education and coaching. “You can generate income by offering courses, coaching sessions, or authoring books on real estate investing,” he said. “Many individuals aspiring to enter the real estate market are willing to pay for expert guidance.”
REITs
“REITs offer a compelling avenue for real estate investment without the burden of property management,” said Mike Qiu, owner of Good as Sold Home Buyers. “These are publicly traded companies that own and operate income-generating real estate assets such as apartments, office buildings or shopping centers. By investing in REITs, you essentially buy shares in these companies, allowing you to benefit from rental income and property appreciation. Moreover, REITs are legally required to distribute a significant portion of their earnings to shareholders, resulting in regular dividends for investors.”
Real Estate Crowdfunding
“The emergence of real estate crowdfunding platforms has democratized real estate investing,” said Qiu. “These platforms connect investors with specific real estate projects, enabling individuals to contribute capital and receive a share of the returns. This method reduces the financial barriers to entry and permits investors to diversify their real estate portfolios across various projects and property types.”
Real estate crowdfunding platforms include CrowdStreet, EquityMultiple and RealtyMogul.
House Flipping
In short, house flipping involves buying, renovating and reselling a property for a profit. To make a profit, it’s crucial to buy low and sell high.
“Flipping can be very lucrative,” said Greg Gaudet, owner of Maui Home Buyers. “We usually earn between $150,000-$250,000 per flip. But each flip usually takes six months or more and requires a lot of capital investment, industry knowledge and experience and connections with reputable contractors, investors, realtors, etc.”
Real Estate Syndication
“An even more passive route is real estate syndication, where you pool money from other investors to buy larger properties together,” said Matthew Pezon, a real estate investor and owner of Pezon Properties. “You can then hire a property management firm as well as an asset manager to take care of higher-level oversight and operations. This frees you up to focus on continuing to raise additional funds, source new property deals and scale your real estate portfolio.”
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