While real estate agents do make a good living and investing in properties is lucrative, you don’t have to be a realtor or rich to take part in the real estate industry. Here are three alternatives to becoming a real estate agent that still allows you to profit in the real estate industry.
Flipping houses, also known as wholesale real estate investing, is when a property is purchased for the sole purpose of being renovated and sold again on the market. This has become very popular, mainly due to home improvement TV shows. This is also an affordable activity because these properties tend to be much less expensive than other properties.
However, this does require some skill and knowledge because there’s the possibility of the renovations costing more than what the home is worth. It’s also important to know which improvements add value to a property and which ones sound nice, but don’t add any value.
It’s also important to understand the difference between renovations and remodels. Renovations are what people think of when changing the look of a room by updating the decor. Installing new floors and paint jobs are examples of renovations. Remodels are when the entire function of a building or room has to be altered. This usually involves electrical rewiring and tearing down walls, so it requires the help of a professional.
2: Rental Properties
This is another common way that non-realtors can make money in real estate. Rental properties are homes, office buildings, and any other type of real estate that can be rented to tenants. If you’re a first-time investor, consider investing in residential real estate (single-family homes, duplexes, etc.) because they’re less expensive than commercial properties (office buildings, malls, industrial buildings, etc.).
Once you’ve gotten your feet wet in the investment world, you can branch out and start investing in different types of properties to diversify your investment portfolio. Another popular option is a vacation rental property.
These types of properties are usually located in a popular tourist state or city, and tenants can only rent for up to six months at a time.
Keep in mind that as a property owner renting to tenants, you’re also considered to be the landlord. Make sure you’re ready to assume the responsibilities of a landlord if you decide to go this route, or that you’re willing to hire a property manager to help you out.
3: Real Estate Investment Trusts
Real estate investment trusts, or REITs, are similar to mutual funds. If you’re still on the fence about investing in real estate, then you can invest in REITs instead. Basically, a large company invests in real estate (usually commercial properties) and investors are allowed to buy into ownership of the property (REIT) and earn some money from it. This method of real estate investing takes a considerable amount of risk away from the investor and most of the risk is placed on the company that is actually putting money into the property. However, this method doesn’t produce as much profit for the investor as investing in an actual property would.
Though these are three unique ways to get into the real estate industry, it doesn’t mean becoming a real estate agent isn’t a good option either. Choose how you want to go into real estate based on your interests. Either way, a good marketing strategy is one of the best ways to ensure that you’ll be successful as a real estate agent, a rental property investor, and even if you’re trying to sell a house you just flipped.