Real estate mania swept the country during and immediately after the pandemic. House prices skyrocketed, and for good reason in big cities like New York. Every state seemed to see the same rise in interest. As supply fell and demand boomed, tons of property owners felt like they were sitting on gold mines. How could they feel otherwise when even the tiniest and oldest houses were sell for a lot of money?
Of course nothing lasts forever. And so is a real estate market that is a seller’s paradise. In 2023, property prices will have normalized and buyers will be able to be more selective again. But just because housing isn’t as red-hot as it was doesn’t mean there aren’t any investment opportunities. If you’re willing to get a little creative, you’ll find many innovative ways to make your money work harder with real estate.
Below are suggestions that will help you enter into real estate. Don’t have a lot of cash available? No problem. You will find that some of these recommendations require little or no financial contribution.
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1. Invest in a holiday object in co-ownership.
Co-ownership as a means of purchasing real estate is not a new concept. Still, it can be difficult to find reliable partners. In addition, numerous co-ownership arrangements are complicated to navigate. Unless you are a seasoned real estate investor, you may feel a little overwhelmed.
If co-ownership sounds complicated, take advantage of new technologies. For example, Plum co-ownership makes it easy to either enter into a co-ownership agreement with friends or other investors. Plum has a group matchmaking process and they walk you through the buying process, while providing a centralized repository for all your documents. This contains all finances and house rules. In addition, you can leave your contract and sell your share to someone else effortlessly.
It’s hard to overlook the investment benefits of co-owning a percentage of a vacation home. You actually own the property versus a timeshare or rental, where you “share time” with no ownership. Plus, co-ownership comes with added flexibility. You have the option to rent out “your” days to travelers, or even sell your share later. You can also minimize the impact of both predictable and unexpected maintenance bills.
2. Consider a lease.
Like co-ownership, this is not a new concept. Nevertheless, it is gaining popularity, especially as Gen Z and Millennials push for homeownership.
According to Javelin Strategy & Research, 55% of Gen Z are open to rent-to-own setups. This is because it is difficult for many younger consumers to buy a home for the first time. Nearly a fifth of all Millennials say they have financial problems which prevented them from buying a house recently. For those with no family who can help them cover a down payment, rent to own just seems like a good choice.
Not familiar with how a rent-to-own exchange works from an investment perspective? In principle, as an investor you could rent a home from the seller. The understanding is that you could own the home at the end of a prescribed rental period. At that point, you could do whatever you wanted with the house, including putting it on the market.
If you already have a property for sale that is not moving, you can offer it through a rental contract. It might be easier to get buyers. Although you have to play landlord for a while, you have a better chance of selling it for a certain price.
3. Buy a multi-family home and live there.
Forget all that growth hacking. It’s time to do some house hacking. This real estate investment process involves finding and buying a multi-family home. However, you wouldn’t rent out all the rooms. Rather, you would live in at least one part of the house.
For example, say you found a duplex that you can afford. You would move into half of the house and find a reliable tenant for the other half. The monthly rent would cover much of your expenses, helping you reduce your out-of-pocket expenses. Who doesn’t want to be assured of reduced (or paid) energy bills, mortgage paymentsetc?
Don’t be afraid to set an aggressive time frame for your mortgage if you go this “passive income” route. While the 30-year mortgage is common, you can find 10-year, 15-year, and 20-year alternatives. With someone else’s rent covering most of your mortgage, you may be able to own your property more quickly.
You will also not be living in your multi-family home forever. By diligently saving and investing your money, you can move forward one day. At that point, you may just want to keep the rent to pass on to other family members.
4. Join Airbnb and couchsurfing.
It seems that Airbnb “always” exists. There is a reason for this phenomenon: the idea of democratizing vacation rentals has completely changed the landscape of hospitality and tourism. Airbnb, VRBO, and other sites have also made it possible for you to sell your space for a premium.
Even if you only have a room with a dedicated bathroom, you’ve got the start of some serious couch surfing. It’s a bonus for you if you’re in a popular city. However, you may be able to find some short-term renters if you’re off the beaten track.
For example, Furnished Finder offers rooms and suites to traveling medical professionals. If you’re located near a healthcare facility, you can earn extra money by renting out your spare room and bathroom to doctors and nurses. As a property owner, all you need to do is get yourself verified. Once you are, you can experience regular room rental income. Since the average medical traveling renter stays 92 daysyou could only have four new guests a year.
The only downside to this real estate investing hack is that there is a stranger in the house. Still, it might not be hard to get used to it become a landlord.
5. Become a “bird dog” in real estate.
In the hunting world, bird dogs are critical to the success of the hunters they serve. After all, bird dogs have the job of pointing out prey. As a real estate “bird dog” you can be just as important.
Real estate bird dogs act as funnels for other real estate investors, such as wholesalers. Bird dogs search for distressed or undervalued properties that investors may want to know about. They then share those properties with the investors and receive a payment when the investor purchases the property.
The great thing about bird chasing is that you can do it part time as a at performance. The not so good? You may find it difficult to get started. Unless you already know hungry real estate investors, you will have to build your own network. It’s certainly not impossible, but it will take some time.
There is a solution you should know about: the app store. There are some bird chasing apps available. Bird Dog Express is a remarkable one. With Bird Dog Express you need very little resources or knowledge to get started. As long as you have a smartphone, you can pick up some investment dollars through bird chasing.
6. Become a power flipper.
It’s hard to turn on HGTV without seeing a house flipper reality show. While TV may seem like flipping is a piece of cake, it does require patience and expertise. Surrounding yourself with people who know how to make fixer-uppers shine is key to making flips profitable.
A smart strategy to start flipping is to talk to other flippers. You can often find them at real estate auctions. Talk to them and see if you can get a sense of what flipping is like. The more you know before you make your first bidding attempt, the better.
That said, flipping out can pay off. You can even live in your flip while systematically upgrading all rooms and landscaping. As long as it’s habitable, you don’t feel uncomfortable. Hey, you just stay there for a second.
Make sure you keep proper records of the real and hidden costs of each flip. You need to know how much you actually earn to decide if flipping is the right option for you.
7. Make your way to financial freedom with the purchase of a parking space.
Do you consider yourself very imaginative? You’ll love this last real estate investment tip: Buy a parking space. People will pay premiums to be able to park in busy areas and cities. In fact, you probably did it yourself.
If you can’t find a parking space, look at run-down buildings that can be leveled and then paved over. Tearing down a building can be pricey, but usually smaller distressed properties with decent footprints sell for very little. You just need to do some math and figure out how quickly you can make a profit.
Of course, you will need a parking attendant, insurance, etc. to own and operate your new facility. You also want to market it. Nevertheless, you may be shocked at how quickly you get your investment dollars back.
Property is and always will be a lucrative investment vehicle. Whatever happens to the market, 2023 could be your year to invest.
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