Real estate is an extremely popular investment opportunity for plenty of good reasons.
Real estate investment can provide passive income opportunities, value appreciation over time, and many tax benefits.
Other lesser-known alternatives offer even greater potential returns than REITs and rentals.
Known as “blue oceans,” these investment opportunities offer less competition and higher profitability than more popular options.
For example, instead of investing in home ownership, you could explore investing in;
- Mobile home parks
- Self-storage facilities
- Co-working spaces
- Raw land
- Manufactured homes
- RV Parks
- Fix and Flip
- Real estate partnerships
You can take advantage of the high demand for remote and hybrid work setups that many companies adopt. Invest in an office building that promotes hot desks or co-working spaces. The same concept applies when your target market has a high demand for flipped properties and self-storage facilities.
Furthermore, you can lease your raw land for agricultural purposes if you live in a rural area. On the other hand, you can put your money in prefabricated steel homes and modified shipping containers that can serve as mobile offices or homes. You can partner with companies that manufacture these structures.
If you’re unsure why investing in real estate is a good idea, there are a variety of benefits to real estate investing.
Real estate has historically been an excellent hedge against inflation, allows you to leverage funds to make a profit, and provides significant tax advantages.
As investing in real estate is a potentially lucrative opportunity, let’s discuss some areas that may provide a lower cost of entry and good potential for profits.
Mobile home parks: Mobile homes don’t require a real estate license to buy and sell, could have a decent markup, and with more and more areas of the US having housing crises, could be a decent alternative for municipalities to encourage building.
Self-storage facilities: Instead of buying a home and renting it out to single or multiple tenants, self-storage facilities provide the same passive income potential without having the burden that landlords experience when renting out housing.
Co-working spaces: Owning and renting commercial space to a single tenant may provide predictable income. Co-working spaces may double or triple your income potential in the same area.
RV Parks: Similar to mobile homes, the upkeep for an RV park is minimal, and the returns may be much better. With an RV park, drivers would be allowed to rent out space to “dock” their RVs either to stay in or to store and pay you to rent per space used.
Fix and Flips: Flippers buy a property below market price and invest a little money to increase the resale value for a quick profit. It can be challenging to flip a house without understanding the market trends and having some construction experience.
Wholesaling: Wholesaling is the process of buying and flipping a purchase agreement without possessing any real property. The opportunity to convert a contract is a newer investment opportunity and one that‘s not too well understood.
If you’re curious about how to flip real estate contracts, It’s a pretty straightforward process.
To begin, you would look for a motivated seller. Typically motivated sellers are people with a significant life event, recent job, or career change. In addition, these individuals generally are looking for a quick, easy sale, where the wholesaler comes into play.
A wholesaler comes in with a strategy to agree to a purchase contract with the intent to sell the contract at a small markup to a secondary buyer, typically a flipper.
The wholesaler would utilize a real estate wholesale contract to secure the agreement and execute any transaction. The wholesale contract stipulates that the wholesaler acts as a broker in the deal and lists the original price and the secondary buyer’s price.
The difference in sale price between the first agreement and the secondary buyer’s price is the profit margin for the wholesaler.
The highest cost a wholesaler may have is to put a down payment on the contract to secure the rights. Still, as an alternative investment strategy, wholesaling has little risk and a decent return of about 15-20% of the secondary purchase price.
Every one of these strategies provides a unique set of risks and rewards. Just like any other investment, you must research the potential risks before diving into any option.
The key to investing in real estate is to look for below-market properties and be able to capitalize on those opportunities to make them worthwhile.
In addition, it’s important to always stay in tune with the latest real estate investment news. You can subscribe to real estate newsletters, directories, community forums, and dedicated websites created by professional and reputable industry leaders. You can also follow real estate leaders on their social media pages to get real-time expert updates.
Furthermore, watching real estate investment videos, listening to podcasts, and reading case studies and whitepapers can also help broaden your knowledge about the industry. However, make sure to use legitimate online resources and platforms to ensure the accuracy of information. These efforts will pay off over time, allowing you to master real estate investing and achieve success.
Real Estate Partnerships
Joint ventures between two or more parties investing in real estate are known as real estate partnerships. Ideally, each partner would provide something of value to the partnership, such as collateral, cash, expertise, or effort.
The objective of real estate partnerships is to have more leverage to buy properties than a single investor would otherwise while collectively spreading any risks and duties while potentially improving potential outcomes.
Real estate has proven to be an excellent opportunity to make generational wealth while also hedging against inflation. But maximizing investment opportunities outside the typical real estate investment includes alternatives like wholesaling and commercial rental space like self-storage spaces.
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