Have you heard that most millionaires make their money in real estate? If so, it’s true. You have probably heard of house flipping, the Buy Rehab Rent Refinance Repeat (BRRRR) method, or wholesaling. There are many different avenues you could take in the real estate market, so the million-dollar question then arises, what is the best way to do so in 2023?
Here, we will go over the BEST real estate niches of 2023 and some of the items on this list may surprise you. Niches can get very specific, but here we are going to cover some broader topics to narrow your focus on where is the best place to start for you.
The tried and true method of real estate investing is looking for rentals. The most common way of investing in rental properties is looking for long-term rentals, meaning the tenant is in the property for over 30 days. This can range from 30 days to 1 year and is most commonly found in apartments, homes, etc. Short-term rentals are exactly as it sounds, short-term. The tenant could be on the property for as little as one single day.
This is commonly found on Airbnb and VRBO. What makes short-term rental properties so interesting is the increased cash flow in comparison to long-term rentals. The average American renter pays $1,326 a month in 2023, in comparison the average daily rate for an Airbnb in the US is $160.47. Adjusted for a month, that is $4814.1, which is a 360% increase in monthly income. STRs also bring with them some risk, the main risk is the chance that you can not rent out the property for a period, which is why long-term rentals are considered safer investments.
Crave the safer investment of long-term rentals and favorable financing options? Duplexes, triplexes, and quadplexes are similar to houses in that they occupy their residential lot but operate more like apartments as there are more doors, meaning more tenants and more cash flow. Lenders do offer conventional financing options, as well as FHA options for any property with 4 units or fewer.
Multi-family properties offer a great option for cash flow and security should you be able to properly find a deal. It is worth noting in the current economic climate of 2022 with interest rates climbing, if you get into this niche it could result in a relatively high-interest rate for any loans and multi-family properties may be overpriced. It does come down to the deal you can find.
A hot topic currently as the market moves lower and interest rates are higher is Real Estate Investment Trusts (REITs for short). REITs are publicly traded, similar to mutual funds. The trust owns a large, diverse portfolio of properties.
Investors who want a more liquid, passive, and diversified real estate investment may decide to invest their money here. At the time, this also covers you from paying higher interest rates and saves you from dealing with the headache of finding properties if you do not have the time.
Land Flipping is the simplest, least competitive, and most profitable sector of real estate. In this niche, you would be looking for and buying vacant land and flipping it for a profit. This niche is incredibly interesting as it is very profitable, avoids higher interest rates, reduces the time you own the property (which has tax implications), and much more.
Land investing requires much less upfront capital, meaning investors would be purchasing the property with cash. Land investors have found an average profit per land flip of $20,000 in just the first 6 months. Land investors are typically looking for a discount of 60-40% on the properties they are looking to acquire. With the combination of location flexibility, and the ability to be able to buy land ANYWHERE in the country there is no lack of deals in this niche.
Not many investors are familiar with this kind of real estate niche, making it even more exciting. Within land investing, there are many sub-niches such as subdividing properties, landlocked properties, Land Notes, RV Lots, among many others.
Land Investing is a lucrative real estate niche with low capital requirements. The market for land investments is massive, with comparatively little competition. Land investing can be done from home and the time commitment is significantly less than in other real estate niches such as house flipping.
Interested in learning more about land investing? Check out our free discord with tons of successful land investors to see how they are capitalizing on this hidden real estate niche & our prior blog post on Land Investing For Beginners.