Capitalizing on the Crazy Real Estate Market – with or without Upfront Cash

The real estate market continues to experience skyrocketing prices and lower-than-normal inventory, leaving a general state of frustration and confusion in its wake.

But despite these unsettling times, real estate as an investment remains a good option, even for people who aren’t flush with cash, says Toby Mathis, a tax attorney and ForbesBooks author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same.

“There are ways to get involved in real estate without having a nickel to your name,” says Mathis, who owns several hundred pieces of real estate throughout the United States. “You could jump in and start doing this right away just by creating the relationships, finding the need, and helping put deals together.”

Mathis says a few ways to make money off real estate – with or without an upfront investment – include:

• Bringing buyers and sellers together. Play the role of the middle man, helping investors find the properties they seek. Mathis likens this to someone giving you a grocery list. Investors specify what kind of property they are looking for and in what area, then you act as wholesaler, making connections to track down properties that fit their requirements. “There are people with massive appetites to acquire properties, and they need people who can go door to door, who know the area, who have the expertise to go out and do that,” he says. This role is both simple and difficult, Mathis says. “It’s simple because you know exactly who you’re buying for and you know what to look for,” he says. “But it’s difficult because you have to do the research and put in the labor.” Mathis says he buys many of his properties from such wholesalers. “Just recently,” he says, “they brought me a great warehouse, something I was looking for, at the right price.”
• Owning rental property. One of the advantages of owning rental property, Mathis says, is that it provides you with passive income. Unlike the paycheck from your employer, passive income is not subject to Social Security tax or Medicare tax. It’s also not subject to self-employment tax. You do pay income tax on money you make from rentals, but deductions such as depreciation and upkeep can reduce that amount. “One of the great things about it is you can have someone else manage the property for you and sit back passively and take in the income,” he says. But there are caveats. For example, if you operate your property as an Airbnb or a traditional bed and breakfast, providing services to the guests, you can be subject to the self-employment tax, Mathis says.
• Owning land without structures. When it comes to generating revenue from real estate, people often think about apartment complexes, self-storage facilities, warehouses or similar structures. But Mathis says there are other ways to bring in money, such as with a cell tower or by selling mineral rights.
• Considering other lease opportunities. Another way to bring in income from real estate is to provide housing for disadvantaged groups. That could mean veterans housing, residential assisted living for the elderly, or transitional housing for non-violent offenders, among other possibilities. “There are people getting county money constantly to do transitional housing,” Mathis says. “Some organizations lease these properties, then contract them out to other organizations.”

“There are endless opportunities when it comes to real estate,” Mathis says. “It’s just a matter of figuring out which of these niches is best for you and your circumstances.”

Toby Mathis, Esq., is the ForbesBooks author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Mathis, a tax attorney, founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. In addition, he is a successful investor and owns several hundred pieces of real estate throughout the U.S. His businesses have been featured five times on the Inc. list of fastest-growing U.S. companies, and have won numerous other awards. Mathis has authored more than 100 articles on small business topics and has written several books on good business practices, including Tax-Wise Business Ownership and 12 Steps to Running a Successful Business.