Real estate is often viewed as one of the most solid investments anyone can make, but did you know that the traditional route of buying property, flipping houses, or becoming a landlord isn’t the only way to succeed? We have previously written two great blog posts, How to Start Your Real Estate Business with What You Have, and 10 Real Estate Business Ideas To Help You Become A Millionaire, which I believe are valuable information to make you millions in real estate. 

After doing my diligent research, what if I told you that there are unconventional ways to break into the real estate industry without necessarily having to buy property upfront while maximising your profits? Yes, you are about to find out all about it. Whether you’re a first-time investor or looking to diversify your portfolio, these ideas will help you think outside the box.

1. Real Estate Crowdfunding:

Real estate crowdfunding is a modern way for individuals to invest in residential, commercial properties or basically any property projects. This type of investment has become popular for many investors and offers an opportunity for those who need more capital to purchase entire properties. With average returns of around 10% to 12%, real estate crowdfunding appeals to those looking to build their wealth and reduce risk by diversifying their investments. 

How Does It Work?

You can participate in real estate crowdfunding through online platforms that connect property developers and companies with individuals seeking investment opportunities. Platforms such as Fundrise, RealtyMogul, and CrowdStreet enable investors to contribute to various real estate projects with as little as $10 to $500 without the need to directly engage with mortgage brokers, real estate agents, or contractors. With just a few clicks, you can quickly determine the amount you wish to invest and the expected returns. As an investor, you can receive a share of the profits from rental income or the appreciation and sale of the property.

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2. REITs (Real Estate Investment Trusts)

A Real Estate Investment Trust (REIT) enables investors to purchase shares in a collection of income-generating properties. REITs are traded on major stock exchanges, just like regular stocks, making it a convenient way to invest in real estate without owning physical property. These portfolios can consist of various properties, ranging from commercial buildings such as malls and offices to residential complexes and healthcare facilities.

Imagine you want to own a small portion of large buildings, like shopping centres or hospitals, but you need more money to buy them outright. REITs (Real Estate Investment Trusts) allow you to purchase a share of multiple buildings. When these buildings generate income, such as through rent, you receive a portion of that income in the form of dividends. This allows you to earn from real estate without having to worry about managing the properties yourself. 

Types of REITs:

  • Equity REITs: These REITs own buildings such as shopping centres, hotels, or apartments and make money by renting them out.
  • Mortgage REITs (mREITs): Instead of owning buildings, mortgage REITs lend money to people or companies to help them buy properties. Similar to banks, they make money from the interest on these loans.
  • Hybrid REITs: These REITs both own buildings and lend money to others to buy buildings.

Why Consider REITs?

Nareit, an association for REITs, reports that REITs have consistently outperformed the S&P 500 in dividend returns. You will be shocked to hear that (Real Estate Investment Trust) is required by law to give most of the money (dividend) it makes, about 90%, back to the people who invested in it. This then ensures that when a REIT generates profits, the investors benefit significantly without having to deal with tenants, maintenance, or property management.

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3. House Hacking

House hacking involves buying a multi-unit property, living in one unit, and renting out the others to cover the mortgage. This is an intelligent way to start your real estate journey with minimal risk. You can live for free (or close to it) while your tenants’ rent pays your mortgage. Eventually, you can save enough to reinvest in more properties.

I know a lot about this particular type of real estate business because my grandpa built a building with three apartments. We lived in one and rented out the others to make extra money. It worked really well till my dad decided to build his building. By living in one of the apartments for free and investing the money he saved, he was able to grow his real estate business quickly.

Resources:

House Hacking: A Smart Strategy to Help Pay Your Mortgage

4. Short-Term Vacation Rentals Without Owning Property (Airbnb Arbitrage)

A Woman in Black Coat Holding a Placard on the Yard

Imagery from Ivan Samkov

The idea of Airbnb Arbitrage is to lease a property long-term and then sublease it as a short-term rental on Airbnb. This basically allows one to make money from real estate without owning the property.

Why It Works:
You rent a property from a landlord for a set monthly rate and then charge higher short-term rates to Airbnb guests. The profit comes from the difference between what you pay the landlord and what you earn from guests. Jasper Ribbers, author of “Get Paid for Your Pad,” started with just one rented apartment and turned it into a six-figure business by applying Airbnb arbitrage. He expanded into multiple properties and now operates a successful short-term rental portfolio without owning a single property.

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5. Real Estate Wholesaling

Real estate wholesale is a strategy in the real estate market. It involves finding undervalued properties, negotiating a contract with the property owner to be the sole seller, and then assigning or selling the property to another buyer at a higher price. What’s interesting about this strategy is that it takes the idea of a “wholesaler” not having personal ownership of the property, like products/services. So, the property wholesaler never takes ownership of the property, which allows one to make a profit without needing a lot of money or good credit.

Why It Works:
Real estate wholesaling requires a little money upfront. You make money by finding good deals and connecting sellers with buyers. It’s a good option for people who want to get into real estate but need more money to buy properties. For example, Cody Sperber, also known as “The Clever Investor,” made his first $10,000 from real estate through wholesaling. Today, he has made millions by continuing to specialise in this method.

To succeed in real estate wholesaling, here are the key points you need to know:

  • You want to familiarise yourself with the local real estate laws to avoid potential legal issues. 
  • Knowing the art of networking will help you find undervalued properties and better marketing offers.
  • Get good at negotiation skills and begin to make a list of people who might want to buy the houses. 
  • Stay updated on market trends and learn from successful wholesalers. Online resources, such as real estate blogs, podcasts, and courses, will provide valuable insights into navigating this profitable strategy.

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6. Investing in Real Estate-Backed Cryptocurrencies


Crypto coinsImagery from Photo Rūdolfs Klintsons

Cryptocurrencies are now making their mark on the real estate market by enabling blockchain-based property investments.

Imagine being able to buy a small piece of a house or building, but instead of paying lots of money, you use digital currencies like Bitcoin or Ethereum. Some platforms, like Propy and RealT, let people do just that. They turn real estate into “tokens” that you can buy, just like owning a tiny fraction of a property. This makes it possible to invest in real estate without needing tons of cash upfront. In 2021, RealT made it possible for a crypto investor to buy a small part of a Detroit rental property with just $50. Allowing them to earn rental income based on the number of tokens they have. This new approach offers an accessible way to make passive income from real estate.

To succeed in real estate-backed cryptocurrencies, here are tips for success in real estate-backed cryptocurrencies:

  • You don’t need a lot of money to begin, just invest a small amount to get comfortable with how it works.
  • Research for trustworthy platforms that allow you to invest in properties with cryptocurrencies.
  • Spread your money across different properties to reduce risk.
  • Keep learning about the market trends and how different cryptocurrencies work.
  • Like any investment, it takes time to see returns, so don’t rush it.

You might also read our recent blog post on How to Instantly Identify Crypto Scams: Rug Pull and Honey Pot. 

7. Lease Options (Rent-to-Own)


A lease option is an agreement in which you rent a house for a certain period and choose to buy it at the end of that period. This means you can live in the house without having to pay the total price right away. 

With a lease option, you have the chance to see if you really want to own the house. If the home becomes more valuable while you’re renting, you can choose to buy it for the original price or sell your right to buy it to someone else for a profit.

Why It Works:
You gain control of a property and have the right (but not the obligation) to buy it later. If the property’s value increases, you can sell the option for a profit or purchase the property yourself.

Success Story:

Matthew Martinez, a real estate investor, used lease options to acquire properties in developing neighbourhoods. He sold the options at a premium or kept the properties, depending on the market, building a portfolio worth millions.

To succeed in this type of business, you want to:

  • Try Living in the house first to see if you like the home before making a purchase decision.
  • If the house’s value rises, you can earn money either by selling your option or by purchasing the home at the original price.
  • You don’t need to pay the entire price right away, making it easier to get started. 

8. Real Estate Development

Imagery from Pexels

Real estate development involves acquiring land or existing properties, improving or building new buildings, and then selling or renting them to generate more income and profit. The idea can be as wide as residential properties, commercial, or mixed-use building projects. Developers can significantly increase a property’s value through renovations or new construction. 

For instance, a developer named Sarah bought an old warehouse in a developing neighbourhood for $500,000. After investing $1 million in renovations and transforming it into trendy loft apartments, she sold the units for a total of $2.5 million. This project not only covered her initial investment but also netted her a profit of $1 million.

How to succeed:

To succeed in real estate, one must understand what people want and what is trending in the market. Start by researching the types of properties that attract buyers or tenants. When you create properties that meet these demands, you can see great returns on your investment, sometimes even reaching millions of dollars.

Conclusion

Real estate offers fantastic opportunities to grow your wealth, and you don’t have to follow the traditional route you are familiar with. From crowdfunding to Airbnb arbitrage to many, many more you have read, these unconventional approaches can pave the way for your financial prosperity. Although each option comes with its challenges, like every business does, but with the right expertise and determination, you can reach your goals.

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