It is entirely possible to be a successful real estate investor without having a real estate license. Millions of investors don’t, yet they are successful in their endeavors. Real estate agents have a license because they help others buy houses. If instead, you invest in the properties yourself, you don’t need the license.
This is our guide on how to make money in real estate without a license.
Fix And Flip Properties
If you love a good hunt, find run-down properties listed at below market value and snatch them up. Now it will be up to you to fix the home up (or you hire contractors), but if you have a keen eye for what buyers want, you can increase the property’s value significantly, walking away with a decent profit.
Pros:
- You can make a quick profit
- You’ll learn a lot about construction, renovations, and what the market wants
- You’ll grow your network of real estate contacts that may help you in future real estate transactions
Cons:
- You may run into unanticipated costs once you start renovating
- You’ll need to do a lot of market research to make sure a property is a good investment
Wholesale Properties
If you have a large network and can negotiate well, wholesaling properties may be a great way to make money in real estate without a license.
When you wholesale properties, you don’t take possession of a property, instead, you act as the middleman. Wholesalers must have great negotiating skills because the idea is to enter a contract at a lower price, find a buyer who will buy it from you at a higher price and you pocket the profits.
Pros:
- You need very little capital to start
- You can make profits in a short time
- You can learn a lot about the real estate industry
Cons:
- It’s not always easy to find a buyer
- The profits are unpredictable
Buy And Rent Out A Property
If you aren’t into rehabbing properties, you can buy a property, keep it, and rent it out. You don’t need a real estate license to buy rental property. However, you do need to do your due diligence to make sure you’re buying an investment property in an area that people want to live in.
You can buy a property in great condition or properties that need a little TLC to make them attractive for renters. The monthly rents earn you positive cash flow if the rent exceeds the mortgage and maintenance costs. The buy-and-hold rental property strategy is a great way to generate passive income that can potentially last you a lifetime.
Pros:
- If you price it right, you could make a decent profit
- It’s a great way to diversify your portfolio
- Real estate is tangible (and can be sold) if necessary
Cons:
- You’re at the mercy of the market, if it falls, you stand to lose money
- You could face many vacancies and/or non-paying tenants
Buy Short-Term Rentals
If you’d rather not deal with the unknowns of long-term leases and tenants, consider short-term rentals. Today more people look for homes to rent on vacation rather than staying in a hotel. Just look at the success Airbnb has had.
If you’ll invest in an area that’s popular with travelers or college students, you’ll have higher occupancy rates and reduce the risk of periods of loss.
Pros:
- You can set fluctuating rates based on the market at the time
- There’s often less wear and tear on the property
- You aren’t stuck with any specific tenants long-term
Cons:
- There are often many more maintenance and repair requirements as short-term renters aren’t as careful as long-term
- Your income could fluctuate
Partner With A Real Estate Agent
Just because you don’t have a real estate license doesn’t mean you can’t partner with someone who does. When you work with a licensed agent, you’ll have access to the MLS listings and have an ‘insider’ able to tell you when something hot hits the market.
Trying to navigate the latest listings and available properties yourself is a big job. When you let a professional do the work, you stand to make more money. Even though you have to pay a real estate agent his/her commission, it usually pays off in the end.
Pros:
- You save time and effort trying to find the right properties to buy/invest in
- You have another set of eyes watching the market for you
- Real estate agents give you access to more properties than you could get yourself
Cons
- The real estate commissions can be hefty
- You have to rely on someone else’s schedule
Real Estate Investment Trusts (REITs)
If you don’t want to own real estate physically, but love the returns it offers, consider investing in a Real Estate Investment Trust . This tradeable asset is like crowdfunding for real estate but it trades on the public market A
A REIT is comparable to a mutual fund made up of stocks, but instead, it is made of rental property and commercial property.
You and other investors pool your money together to fund a real estate project. You earn divided based on the property’s performance or the investor’s repayment schedule and the amount of your investment.
Pros:
- You don’t need a lot of capital
- You can invest in commercial real estate by pooling money with others
- You don’t have to do the maintenance and repairs
Cons:
- There’s no guarantee of a positive return
- You don’t have a tangible asset
Real Estate Crowdfunding
Another excellent way to generate passive income is through crowdfunding platforms like CrowdStreet and Fundrise. With these platforms, the goal is to fund real estate projects using a small investment from a large number of investors. You can effectively become one of the many investors that lends capital to the overarching fund that acquires investment properties.
Crowdfunding is similar to a real estate investment trust, meaning that the objective is to acquire profitable commercial real estate, using the rental income generated to pay back investors.
One of the main reasons that crowdfunding is growing in popularity with real estate investors is because it can deliver positive returns, with very little effort on behalf of the investor. You don’t need to worry about tenants, communicate with a property manager, or spend any time marketing properties. All you need to do is decide on how much you are willing to invest, provided you are happy with the returns that are on offer.
Pros
- Simple way to generate passive income with real estate property
- You don’t require much capital to get started
- There are a number of crowdfunding platforms that you can use
Cons
- The returns are limited
- You have little to no control over how the funds are spent
- There are a number of crowdfunding platforms can be classified as ‘risky’. You need to stick to tried and trusted platforms when implementing this strategy.
You Can Make Money In Real Estate With No License
There are many ways investors can make money in real estate. Acquiring investment property is a great way to diversify your portfolio rather than relying solely on the stock market. With a diversified portfolio, you offset the major losses by not having all your eggs in one basket.
Think about how you want to invest in real estate and see what’s required. Most investors start with very little capital and then build their portfolio as their investments grow. It’s a fun way to invest your money and set yourself up for retirement or other large financial goals.