Initially, it can seem overwhelming. Instagram is full of real estate advice and incentives:
- “Don’t wait to buy real estate; buy real estate and wait.”
- “The major fortunes in America have all been made in land.”
- “Buy land. They’re not making it anymore.”
- “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Most people understand that there can be large profits in real estate. What you might not know, however, is that there are many different ways to make money in the real estate industry.
Make money in real estate with these 7 real estate business ideas
Here are some of the top real estate business ideas that you can use to tap into this lucrative market.
- Become a landlord.
- Flip property.
- Manage property.
- Real estate photography.
- Become a real estate agent.
- Combine real estate business ideas.
Interested in getting into real estate and designing a plan to help you build your career and a possible fortune? Learn about some different aspects of the real estate industry and find the strategy that’s right for you. Let’s look at each real estate business idea in more detail.
1. Become a landlord
For many people, becoming a landlord is the foundation of their real estate business model. By owning a property and renting it out, you can make money in two ways:
- You’ll get paid consistently thanks to the cash flow that you receive in the form of rent each month. As you use this monthly cash flow to pay off the property and raise rents in tune with market increases, your profit margin grows annually.
- You earn long-term gains through the appreciation of your property’s equity over time. You realize these gains on selling the property. You can also draw on the equity you build to finance repairs, improvements and expansion of the portfolio.
Being a landlord gives you both a reasonably good cash flow and a strong investment asset. It also provides the ability to build a legacy portfolio of properties that can be passed down to your heirs with minimal tax liability.
Interestingly, landlording to profit from real estate has been around since medieval times, when actual lords owned land and collected payments from those who worked on it. In more modern times, real estate has created millionaires and billionaires throughout the world. America’s first multimillionaire, John Jacob Astor, bought gigantic pieces of land in and around New York City in the late 18th and early 19th centuries. Astor would then lease the land to developers, who would build on it. At the time of his death, he was the richest man in America, thanks to real estate investments.
Most landlords work full time. It is possible, however, to do it part time, especially if you use a property management company to take care of day-to-day tasks at your rental properties.
You can also run your rental business from your own home, though many landlords eventually choose to set up an office for convenience.
One way to leverage your role as a landlord and build your business is to move from owning and leasing single-family homes to owning multi-family properties like duplexes, triplexes and larger buildings. This allows you to reduce your property tax and management costs while doubling, tripling or quadrupling your profitability.
2. Flip property
One of the most high-profile real estate business ideas, property flipping has been popularized by addictive TV programs over the last several years. Property flipping involves buying a distressed home, repairing and modernizing it and then selling it for a profit, usually to a retail buyer.
While flipping a house doesn’t offer the continuing cash flow of rental income, it can create large, one-time profits on individual properties.
Many general contractors will buy and flip one or two homes a year for extra money on the side. On the other end of the spectrum, there are real estate investors who specialize almost exclusively in flipping. Like rentals, a property flipping business can be run from your home if you choose.
One of the key factors to consider if you are focusing on property flipping is carrying costs. In order to keep your flip profitable, you need to minimize the amount of time you hold the property.
Every day you own the property, you are paying the mortgage, taxes, insurance, utilities and other costs associated with it.
This is why it is vital to consider the efficiency and availability of your repair or improvement construction crew as well as the state of the market to reduce “days on market” (DOM) once you list the completed property for sale.
Another way to increase profitability on flips is to carefully control costs. Ensure that the improvements you choose will truly pay off at closing. Avoid costly design extras that look good but don’t add to the bottom line. Remember, you are not designing a house for yourself; you’re designing a house for local buyers in a specific market at a particular price point.
3. Manage property
It’s a common misconception that you have to own property to make money from it.
If you want to jump into real estate without purchasing property, try property management.
Property managers handle maintenance, upkeep and in many cases collect rent for a property owner in exchange for a fee (usually a percentage of the rent). In addition, you need to be able to find new tenants to ensure that your properties are rented out consistently.
Expect to work close to full time if you start a property management company.
Though you could run your property management business from home, it will be easier to have a dedicated business location, as you’ll need storage for paint, drywall, cleaning supplies and other common maintenance materials for the properties you manage.
Additional costs might include assistants or subcontractors for lawn maintenance and landscaping, plumbing, electrical work and painting.
You need to be available in the event of an emergency at the properties you manage. Storm damage or an emergency repair will require quick action on your part or a contingency plan if you are unavailable.
Real estate investors are always on the hunt for good deals. This has given rise to an entirely new set of freelance real estate professionals, known as bird dogs.
Bird dogs find good deals for investors, earning either a small percentage of the deal or a flat fee.
The reality of bird-dogging is that it is nowhere near as easy as some people make it out to be, as investors won’t pay for information about properties that are already listed.
If you can identify sellers before a property is listed, however, you can make some real money as a bird dog. Bird-dogging can be done part time or full time. Most real estate bird dogs work from home.
Just as the name implies, keeping your nose to the ground is the key to being effective in this area of the real estate industry.
In addition, you might be able to generate leads through effective content marketing, circle prospecting, mailers, or signage.
The idea is to find hidden properties that no one else has discovered yet.
Remember, you’re not necessarily looking for buyer-ready properties. Significantly distressed properties might be just the ticket for a flipper, while a long-term investor will be more interested in tenant-ready properties that can be quickly cleaned up and ready to welcome renters.
Look for a variety of properties and investors to increase your chances of success.
5. Real estate photography
Not all real estate business ideas have to do directly with the properties themselves. Some, such as being a real estate photographer, involve marketing the property.
Real estate photographers take photos of homes for sellers or landlords that are then posted online as part of a marketing campaign.
As a real estate photographer, your hours are largely determined by the number and size of the houses you have to shoot in a given day. Larger houses require more photos and therefore more time.
Many real estate photographers choose to base their businesses in their homes, though most of the actual work will be done on location at the properties being photographed.
If you want to differentiate yourself and your service, you might want to add drone photography or video to your service portfolio.
In many areas, drone photography is an important part of contextualizing the property location and showing off the features of luxury properties, farms and larger parcels.
You will need to invest in high-quality photography and lighting equipment and sophisticated editing platforms to ensure that your photos show the property at its best.
Working with the homeowner or real estate agent to ensure that the house is properly prepped, cleaned, landscaped and staged will go a long way to ensuring that your photos are the best they can be.
6. Become a real estate agent
While some business models like bird-dogging and flipping are more novel, being an agent has been a common way to participate in the real estate industry for as long as the modern property market has existed. Becoming a real estate agent is more difficult than breaking into some other parts of this industry, as it requires formal education and, typically, state certification.
As a real estate agent, you’ll need to be able to sustain yourself financially when you are first starting out, since real estate agents are not paid until the property closes. That means that all marketing efforts and costs, including professional photography, signage, open houses and mailings, will have to paid out of your pocket up front. You receive your commission when the sale of the house closes.
Being a real estate agent can be a highly lucrative career, especially if you develop expertise in a particular market or niche.
The more you continue to grow and educate yourself, the more you’ll achieve.
A talent for connecting with others will go a long way in helping you grow your business. Many real estate agents are known for their winning and engaging personalities.
A great website, consistent content production, and ongoing social media management can ensure that you quickly make a name for yourself, even against more experienced agents.
Promote your real estate business with content like blogs, videos, or podcasts geared to a particular neighborhood, market niche or audience.
Being a real estate agent is one of the few business models in which working from home is not really an option.
Related: How to start a real estate business
7. Combine real estate business ideas
As you can see, the real estate industry offers diverse opportunities for aspiring entrepreneurs.
One of the best ways to build a small real estate business, however, is to combine complementary business models.
For example, a property management company that offers photography services can save owners time and effort. A real estate agent who is also able to produce high-quality photography for his or her listings will both save money on marketing and offer a value-added service. Many real estate agents also serve as property managers. With their network of contacts, it’s easy to list rental properties and find new tenants on an ongoing basis.
Other real estate agents might work as bird dogs, letting investors know about potential properties and connecting them with prospective sellers.
One important thing to keep in mind: as a real estate agent, you have a fiduciary duty to your client.
That means that you must do whatever is in the client’s best interest, even if it cuts into your own plans or profits. That is why it is essential that you exercise caution when working with investors or on investment deals that might benefit you directly. You might want to establish a policy that you do not do investment deals with clients, to ensure that there is no question of improper influence or decision-making on your behalf.
Many investors choose to flip properties and build a rental portfolio to give themselves more diverse income streams.
Some also become real estate agents themselves, allowing them to better understand the market and handle their own transaction management, saving them thousands each year in agent commissions.
Let your interests and time commitment be your guide as you consider ways to mix and match various aspects of the real estate industry.
In addition, having experience and qualifications across various aspects of the industry will help you better weather economic and market downturns by diversifying your business.
For example, when demand is low, you might want to put more effort into the investment side of your business, since you will be able to get better deals from sellers frustrated by a slow market. When demand is high, you can step up your work as a real estate agent, working with buyers and sellers to navigate a hot market.
Take the first step now
These are just a few of the many real estate business ideas that have been used to create sustainable, profitable businesses.
Whether you want to become a real estate agent, a landlord or a property manager, the hardest part is taking the first step. Begin working on your real estate business today so that it can turn a profit tomorrow.
There are many blogs, books, podcasts and other expert content platforms out there to help you learn the ins and outs of the real estate industry. Educate yourself and consider your own strengths and aversions as you determine what areas of the industry you want to pursue.
Once you’ve settled on a path, promote your bird-dogging, property management or real estate photography services with a website geared toward real estate professionals. The earlier you begin creating an online presence, including content designed for your particular market segment, the more you will build your credibility and your digital footprint.
Finally, get out there and get to know the movers and shakers in your local market. The more colleagues and mentors you can find, the better your chances of weathering the ups and downs of a career in real estate. You can make money in real estate.
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