8 Paths to Real Estate Wealth: Income Strategies for Every Investor

The most common way to invest in real estate is by purchasing and maintaining a property that provides rental income. Within this investment strategy, there are a variety of property types and income streams to consider. Below I outline some of the most common and their pros and cons to help you evaluate the investment strategy that is best for you.

1. House Hack

Renting out a portion of your primary residence to off set your living expenses or create cash flow. This could be renting out a room in your house, renting your house while you are away, creating an ADU (Accessory Dwelling Unit) that you rent, or purchasing a duplex and occupying half of the property.

Pro: Great way to off set your expenses

Con: Means sharing your space with others, sometimes strangers.

2. Long Term Housing Rentals

Renting out a single family or multifamily property on a long term basis and receiving cash flow in the form of monthly rents. If sharing your personal space is not appealing, long term single/multifamily investing is the best way to get started in real estate investing. One easy way to get started is to rent instead of sell your primary residence when you move to another home. This is how I got started in real estate investing.

Pro: Easy way to get started in real estate investing.

Cons: Residential real estate it can be more headaches that other real estate investment types.

3. Short & Mid Term Housing Rentals

Renting a single or multi-family property for a period of less than 30 days is considered short term, anything that is fully furnished but rented for longer than 30 days is mid-term. The presence of this type of investing has increased exponentially over the last few years as Airbnb and Furnished Finder are helped pave the way. Because of the increase, many municipalities and owners associations have limits on short term rentals but in those areas mid-terms may still be a possibility. It is especially important to know the codes before purchasing anything for these types of investment.

Pro: Higher returns that other types of residential real estate investments

Cons: More work, vacancy risk, and upfront costs

4. Commercial Properties

Office, retail or industrial properties rented for business use. Often they are rented on a NNN lease which means the tenant is responsible for most all maintenance of the property and the Landlord can pass along most costs, except capital improvements, to the Tenant. Leases are generally signed for 3-10 years but most Tenants will ask for improvements and free rent in signing a new lease.

Pros: Less work and more predicable returns

Cons: Need deeper pockets to prepare for vacancy and leasing costs

5. Self Storage

Renting space for the storage of goods and vehicles such as RVs or boats. Generally these are on short term basis with most leases being month to month.

Pros: Less headaches since you are dealing with stuff instead of people, properties for sale can be hard to find.

Cons: Short term leases means more risk of vacancy in a down economy and marketing costs.

6. Land

There are a variety of ways that vacant land can generate revenue from storage rents to agricultural or event uses.

Pros: Tenants take on most all operating costs so little management needed

Cons: Longer vacancy cycles as these are very specialized uses

7. Mobile Home Parks

Tenants pay rent on the land they are occupying for their mobile home. Tenants tend to stay for long periods of time as most mobile homes are not very mobile.

Pros: Good returns and ability to increase rents over time

Cons: Hard to find opportunities and stigma of this asset type

8. Hospitality & Campgrounds

Owning property for use as a hotel, motel, bed & breakfast, or campground. Depending on the property many owners also run the hospitality business or partner with an operator.

Pros: Specialized use makes it easier to sell if revenues are strong

Cons: Hard to find properties and may include running the business

If you are interested in jumping into the world of investment real estate get in touch. For over a decade I have been helping investors and business owners to grow their wealth and I would love to help you as well. If these types of real estate investments do not appeal to you, check out my article Finding Your Investment Style, where I explain two other avenues of real estate investing that involve much less management and time commitment.