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Investing in real estate is the best way to make money. Think about it just about every family fortune which has been passed down through the generations revolves around real estate. Sure, there are other ways to make money, but when it comes to protecting wealth, smart investors know real estate is a critical part of any portfolio. With that in mind, here are four ways real estate investors are making tons of money now.

1. Residential Rental

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While the housing market might be slacking, the market for rentals has never been more competitive. Yes, there are price pressures in some markets, and some local and state governments are starting to take a more active role in the market. But long-term residential rentals continue to be one of the most lucrative sectors in the housing market.

There are three reasons for this. First, people need a roof over their heads. Sure, some of us continue to live with our parents well after high school and college, but most of us want a place of our own.

This brings us to a second reason why residential rental properties are a good investment โ€“ some of us cannot afford to own a home. As for the third reason, some donโ€™t want to own a home as they see this not as an investment but as a burden.

According to Palm Beach real estate specialist Tim Frater of LiveWPB.com, โ€œThe investment landlord market is booming right now. For investors who can spot good deals, have the cash to make small improvements, and can manage tenants, there are large gains to be made in both rental income and home appreciation.โ€

Either way, this creates an opportunity for investors who can spot the right properties and the right tenants and bring the two together. If you think this is too much for you, think again. The residual income potential of owning a rental property should be enough to win you over.

2. Senior Living

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While Millennials now represent the largest generation in the county, millions of Baby Boomers are either currently living in senior housing (either independent living or a care facility) or who will be moving into these properties in the coming years.

This fact of demographics represents a massive opportunity for real estate investors. Granted, you might not want to go through the process of getting licensed to operate the facility, but owning a property that can host a senior living development opens the door to lease it to a management company that will manage the operation for you.

In doing so, you free yourself up from the burden of managing compliance with state and federal authorities while you are in a position to create a residual revenue stream, which will also appreciate as demand for space continues to grow. As such, investments in senior living facilities are of the best real estate investments you can make today.

3. Home Flipping

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Now flipping has been around for a year, and while many investors were pushed out the market during the Housing Crisis, there is still an opportunity profit handsomely remains. Part of it starts with knowing how to find off-market opportunities, which you can buy cheaply. This includes exploring wholesale real estate options as well as targeting people who either behind on their mortgage or are considering downsizing. Check SkyStoneUSA.com for more information.

Beyond developing a pipeline of potential properties, determining which properties are the best fit for you is key to success. One reason investors were hurt during the last downturn is that many bits off more than they could chew. This includes acquiring expensive properties and not properly managing the renovation process.

Some of the best flipping opportunities are when you only need to undertake cosmetic improvements. This could include a fresh coat of paint, updated appliances, or even something as simple as a driveway upgrade or a new roof. The reason is that these projects are generally less intensive than remodeling a kitchen or a master suite, and this means that you can be in and out of a property in less time.

Granted, not every opportunity will be the perfect chance, but if you are serious about making many from flipping homes, then you will need to develop your bargain hunting and project management skills.

4. Hard-Money Lending

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What is hard money lending? This is when investors offer short-term, asset-backed loans to those who either cannot qualify for traditional bank financing or cannot wait for the underwriting process to be completed. While these loans are not without risk, the interest rates are much higher than bank financing options, and the terms are usually one year or less.

As such, the outsized returns in subprime lending make it hard to resist as an investment vehicle.

However, if you are new to hard-money lending, you shouldn’t begin underwriting loans directly. Instead, you will want to park your money with a fund that has experience in this sector. While you will have to pay the management fees, the fund will know how to screen loan applicants, and this knowledge will help to reduce the inherent risk tied to these loans.