For most entrepreneurs, the real estate industry provide a very great opportunity to make money. Its relative stability makes it a good option for capital appreciation, and when done well, it can generate exponential profits.
For example, in 2019, the housing market made significant gains, driven largely by a reduction in supply and very low mortgage rates.
As a result, experts predict that the trend is likely to continue, meaning that for entrepreneurs and investors looking to turn serious profits, real estate is definitely the place to be looking at.
Of course, the majority of the high profile career opportunities in real estate involve buying and selling residential properties. However, the industry has depth, and there are many other jobs you can get with a real estate license.
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Whether you’re looking for something with more flexibility, more structure, higher stakes or lower stakes, you’re probably going to be able to find the career opportunity you want within real estate.
Now that we have been able to establish that there are great opportunities in the real estate business, we will now discuss 10 of the opportunities you can take advantage of.
- Investments in Real-Estate Focused Companies
- Real estate managing broker
- Short-Term Rentals
- Commercial real estate agent
- Property manager
- House Flipping
- Real Estate Investment Trusts
- Become a Landlord
- Real Estate Mutual Funds
- Real Estate Investment Groups
Investments in Real-Estate Focused Companies
As they say, sometimes the people who make the most money are not the miners, but the traders selling pickaxes.
For instance, many startups are using AI, machine learning and other frontline technologies to provide services to real estate companies, homeowners and other stakeholders — and making a killing while doing it.
If you have an idea for a company in the real estate sphere, now is a good time to launch it. You can also go the indirect route by investing in a promising company.
As always, do your due diligence and ensure that the business model is workable and likely to provide good returns before you put your money, time and effort in.
Real estate managing broker
Being a real estate broker isn’t the same thing as being a real estate agent, even though the two terms are often informally used interchangeably.
The difference between a broker and an agent is that a broker is a licensed real estate professional who has taken further education and is qualified to manage a real estate office with multiple agents.
A real estate broker may be a career path to set your sights on if you’re already in the process of becoming an agent and want to know how your career could continue to grow. It’s one of the jobs that require a real estate license on this list, though not every job we have listed here does.
Short-Term Rentals
Rental property has always been one of the surefire ways to earn money in real estate, as long as you get the fundamentals right.
Whether you’re constructing homes or renovating, renting out your property will bring in a steady income that you can re-invest into the business or use for other purposes.
Nowadays, the traditional rental model is still workable, but is taking a backseat compared to short-term rental services like Airbnb. You can often charge a premium, especially if your property is in a vacation destination.
“The good thing is that you can hire a property manager to handle all aspects of the process for you,” according to Morgan Akchehirlian, CEO of Co-Host Market. “There is a ton of opportunity in short-term rentals, and I believe that once people see them, they are going to leap at them.”
Commercial real estate agent
It’s natural to think of residential agents when you talk about the real estate industry. After all, that’s what most of the real estate reality T.V. shows are about and you also don’t see images on the cover of the tabloids about which celebrity leased office space lately.
However, commercial development can be as rewarding as residential and in some cases may suit your style and strengths even better.
The day-to-day of a commercial real estate agent can include more research than that of a residential agent. A commercial agent helps businesses choose and secure locations that are going to boost their bottom line.
While sometimes that means leasing great office space, other times it can be finding the perfect location for the next major coffee chain to build a store. For this reason, commercial agents often must put more emphasis on uncovering statistics and data about the area before they complete a transaction.
Property manager
When it comes to discovering what you can do with a real estate license, becoming a property manager is often a very appealing choice.
A property manager is tasked with the responsibility of making sure a property — residential or commercial — runs smoothly and is, ultimately, making money for whoever owns it. When it comes to residential properties this could mean wearing many different hats such as leasing agent and repairman.
Depending on the size of the property and the strengths of the property manager some or all of these tasks could be outsourced and the property manager’s role is simply to coordinate them and make sure the property is upkept.
This is more common for commercial property managers. If a job as a real estate manager interests you, this guide can help you learn everything you need to know about real estate management jobs.
House Flipping
This kind of real estate opportunity is ideal for people with significant experience in real estate valuation and marketing, and renovation expertise.
They can easily start it with capital and the ability to do or oversee repairs as needed.
Advantages: Flipping has a shorter time period during which capital and effort are tied up in a property. But depending on market conditions, there can be significant returns, even in shorter time frames.
Disadvantages: Real estate trading requires a deeper market knowledge paired with luck. Hot markets can cool unexpectedly, leaving short-term traders with losses or long-term headaches.
How flipping works: This is the wild side of real estate investment. Just as day traders are a different animal from buy-and-hold investors, real estate traders are distinct from buy-and-rent landlords. Case in point: Real estate traders often look to profitably sell the undervalued properties they buy in less than six months.
Pure property flippers often don’t invest in improving properties. Therefore the investment must already have the intrinsic value needed to turn a profit without any alterations, or they’ll eliminate the property from contention.
Flippers who are unable to swiftly unload a property may find themselves in trouble because they typically don’t keep enough uncommitted cash on hand to pay the mortgage on a property over the long term. This can lead to continued, snowballing losses.
There is another kind of flipper who makes money by buying reasonably priced properties and adding value by renovating them. This can be a longer-term investment, where investors can only afford to take on one or two properties at a time.
Real Estate Investment Trusts
Investors who want portfolio exposure to real estate without a traditional real estate transaction will find this very interesting.
Advantages: REITs are essentially dividend-paying stocks whose core holdings comprise commercial real estate properties with long-term, cash-producing leases.
Disadvantages: REITs are essentially stocks, so the leverage associated with traditional rental real estate does not apply.
How REITs work: A REIT is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges, like any other stock.
A corporation must pay out 90% of its taxable profits in the form of dividends in order to maintain its REIT status. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed on its profits and then have to decide whether or not to distribute its after-tax profits as dividends.3
Like regular dividend-paying stocks, REITs are a solid investment for stock market investors who desire regular income.
In comparison to the aforementioned types of real estate investment, REITs afford investors entrée into nonresidential investments, such as malls or office buildings, that are generally not feasible for individual investors to purchase directly.
More important, REITs are highly liquid because they are exchange-traded. In other words, you won’t need a realtor and a title transfer to help you cash out your investment. In practice, REITs are a more formalized version of a real estate investment group.
Finally, when looking at REITs, investors should distinguish between equity REITs that own buildings, and mortgage REITs that provide financing for real estate and dabble in mortgage-backed securities (MBA).
Both offer exposure to real estate, but the nature of the exposure is different. An equity REIT is more traditional, in that it represents ownership in real estate, whereas the mortgage REITs focus on the income from mortgage financing of real estate
Become a Landlord
Ideal for: People with DIY and renovation skills, who have the patience to manage tenants.
What it takes to get started: Substantial capital needed to finance up-front maintenance costs and cover vacant months.
Advantages: Rental properties can provide regular income while maximizing available capital through leverage. Moreover, many associated expenses are tax-deductible, and any losses can offset gains in other investments. In ideal situations, properties appreciate over the course of their mortgages, leaving landlords with a more valuable asset than they started with.
Disadvantages: Unless you hire a property management company, rental properties tend to be plagued with constant headaches. In worst-case scenarios, rowdy tenants can damage property.
Furthermore, in certain rental market climates, a landlord must either endure vacancies or charge less rent in order to cover expenses until things turn around. On the flip side, once the mortgage has been paid off completely, the majority of the rent becomes all profit.
According to U.S. Census Bureau data, sales prices of new homes (a rough indicator for real estate values) consistently increased in value from 1940 to 2006, before dipping during the financial crisis.
Subsequently, sales prices resumed their ascent, even surpassing pre-crisis levels. It remains to be seen what the longterm effects of the coronavirus pandemic will be on real estate values
Real Estate Mutual Funds
You can choose mutual funds that invest generally or select one that’s focused on a specific type of investment. Real estate mutual funds restrict their activity to property trading and other related businesses, which means that they will benefit from the trend of profitability in the sector.
When you’re making a decision as to which fund to put your money into, consider its track record and methodology. Just because two funds style themselves as real estate mutual funds does not mean that they have the same investment rules.
Find one that has consistently made a profit and whose investment styles you’re confident in. Mind the fees too – lower is better, but be sure you’re not sacrificing quality.
Real Estate Investment Groups
Ideal for: People who want to own rental real estate without the hassles of running it.
Advantages: This is a much more hands-off approach to real estate that still provides income and appreciation.
Disadvantages: There is a vacancy risk with real estate investment groups (REIGs), whether it’s spread across the group, or whether it’s owner specific.
While these groups are theoretically safe ways to invest in real estate, they are vulnerable to the same fees that haunt the mutual fund industry.
What’s more, these groups are sometimes private investments in which unscrupulous management teams bilk investors out of their money. Fastidious due diligence is therefore critical to sourcing the best opportunities.
How REIGs work: Real estate investment groups are like small mutual funds that invest in rental properties. In a typical real estate investment group, a company buys or builds a set of apartment blocks or condos, then allows investors to purchase them through the company, thereby joining the group.
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A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all of the units, handling maintenance, advertising vacancies, and interviewing tenants. In exchange for conducting these management tasks, the company takes a percentage of the monthly rent.
A standard real estate investment group lease is in the investor’s name, and all of the units pool a portion of the rent to guard against occasional vacancies.
To this end, you’ll receive some income even if your unit is empty. As long as the vacancy rate for the pooled units doesn’t spike too high, there should be enough to cover costs.
As a real estate investor, whether you use your properties to generate rental income, or to bide their time until the perfect selling opportunity arises, it’s feasible to build out out a robust investment program by paying a relatively small part of a property’s total value up front.
But as with any investment, there is profit and potential within real estate, whether the overall market is up or down.
