You may have heard that buying and holding stocks could be your ticket to long-term wealth. But if you're looking to branch out into real estate, here's some good news: The right moves on your part could actually lead to a million-dollar portfolio. Here are just a few ways to hit that target in real estate.
1. Be a stealth house flipper
House flipping isn't for the faint of heart. There's a lot of risk involved and often, a lot of physical work (which you can technically outsource, but that'll eat into your profits).
But if you buy homes at the right price point, invest in those homes strategically, and choose the right markets, you could do very well for yourself as an investor. Furthermore, the more experience you get flipping houses, the better positioned you might become to turn homes over quickly. The result? You could, through the years, reach millionaire status.
2. Buy and hold income properties
Owning income properties could make you extremely wealthy, especially if you hang on to those properties long enough for them to appreciate in value. The upside of holding income properties is getting to collect rent as you go to not only offset your costs, but invest with. And when you're ready to start selling pieces of your portfolio decades down the line, the homes you own may be worth far more than what you paid for them.
Of course, owning income properties isn't without risk. You could face rising property taxes, repair costs, and vacancies. And you may not have the time to be a hands-on landlord, in which case outsourcing that work to a property manager could result in less income for you. But homes have a strong tendency to gain value over time, so if you're willing to take on those risks, you could become very rich.
3. Load up on REITs
Just as holding stocks for many years could make you extremely wealthy, so too can loading your portfolio with REITs, or real estate investment trusts. REITs are similar to stocks in that many trade publicly, and their value can fluctuate based on market conditions as well as their own performance. And so if you build a portfolio of quality REITs, the value of your shares could grow through the years.
But that's not the only way to make money with REITs. REITs are required to pay at least 90% of their taxable income to shareholders in the form of dividends, which means they tend to pay higher dividends than your average stock. That's money you can reinvest through the years for added growth.
Could real estate make you a millionaire?
There are different ways you can build wealth as a real estate investor, so you'll need to think about how much time you want to sink into it and what your appetite for risk looks like. If your preference is to be more of a hands-off investor and you don't have the highest tolerance for risk, you may want to forgo the house-flipping route and focus on REITs, which are a great tool for generating passive income.
On the other hand, if you have the stomach for physical real estate, you could do quite well for yourself if you're willing to become a landlord or fix and flip houses.
Either way, the world of real estate offers many moneymaking opportunities, and the sooner you start dabbling in it, the wealthier you might become in time.