Real estate investing is one of the primary drivers of wealth in the United States.  It's so easy, an immigrant with less than $100 built a $100 million real estate portfolio! We’ve gathered his tips to show you how to invest in real estate and make a great living. Thach Nguyen was the youngest realtor in Seattle when he started in 1991. His first mentor taught him to market to people he didn’t know, then his second mentor taught him to acquire real estate. That's when Thach Real Estate Group was born. Today, he makes around $100K net profit each month from the $800K revenue he brings in on assets worth nearly $100 million. Thach shared advice on how to:

• Create passive income
• Invest in real estate actively and passively
• Use online platforms
• Make the most out of a real estate website
• Earn a great living without being a personal finance wiz

He covers all of this in his course on building a $100M rental portfolio.

How to Invest in Real Estate

We'll show you how to invest in real estate in this step-by-step guide. Just follow this easy process to get started. [su_note note_color="#dbeafc"] If you're already familiar with real estate investing, jump ahead with any of the links below.

1. Start with a real estate investment plan
2. Consider what is the best tax structure for your income and scenario
3. Look at active investment options
4. Find ways to invest without buying property
5. Get real estate software to manage investments
6. Find investors
7. Keep growing your business [/su_note]

Step 1. Start with a real estate investment plan

Before you begin buying real estate, you'll want to develop an investment strategy. Thach explained: [su_quote] A personal finance plan is important before you start. Most people will start by house flipping or wholesaling real estate.[/su_quote] Check out our interview below. [su_youtube url="https://www.youtube.com/watch?v=TWCzwn3R78A"] Your plan doesn't have to be complex. It can be as simple as answering the following questions:

1. How old do you want to be when you stop working?
2. How much do you want to make?
3. How much is the average rent in your area?
4. How much profit do you make on each property? 
5. How many rental properties do you need to own?

How to Get Started In Real Estate

Another real estate entrepreneur, Emma Powell, suggests considering whether you prefer owning physical property or indirect real estate investing. [su_quote] There are four levels of investment management levels you can choose:

• Passive: Invest in other people's deals.
• Hands on: Start a joint venture.
• More active: Buy and rent.
• Most hands on: Create your own investment firm.[/su_quote]

Once you've decided how hands-on you want to be, you should consider how different types of investments will impact your finances. Check out our interview with Emma about how to get into real estate below.

Step 2. Think about your taxes, finances, and regulations

Different types of investments will impact your taxes and finances. Consider:

1. Do you want a liquid asset (stocks, bonds, ETFs, publicly offered REITs) or to buy properties?
2. Are you an accredited investor? Accredited investors are people who make over $200,000 or have a net worth of over $1 million, excluding their first home. This gives you access to private equity opportunities. Learn more.
3. Do you need monthly or quarterly distributions? If so, you don't want to invest in capital appreciation models or real estate developers.
4. What is your tax income bracket? REITs count as normal income. If it's not in a retirement fund, it will create a major tax consequence.
5. Are you a real estate professional? You only qualify as a real estate professional if you spent more than 50% of your working hours managing real estate, own 5% or more of the company, and worked at least 750 hours during the year. Check the IRS website for more information.

[su_note note_color="#dbeafc"]

The IRS loves going after real estate investors who do not have a real estate agent license. My family has dealt with two audits regarding the real estate professional rules.  If you are going to try to claim more than the $25,000 limit for normal real estate, you need to make sure you have documentation that is created the year you are filing for. That means you need to consider the following:

1. Take detailed notes of date, time, and what work was performed.
2. Make sure to have security cameras on all your rental properties—and time stamp the videos. Make a hard copy of the video before the year ends.
3. Identify everyone in your phone that is real estate related as “Name (real estate).” Make sure to print out your phone bills before December 31 each year.
4. Save all expenses related to the tax claim. Use accounting software to automate documentation.
5. Use a mileage tracker to document miles and time spent commuting.

Read IRS 2021 Publication 925 for the regulations regarding the real estate professional classification. [/su_note]

Step 3. Consider ways to invest in real estate actively

There are so many options for real estate investors. You can choose to buy your own home, buy rental properties, flip houses, or use investment vehicles to get exposure to real estate without being actively involved. Emma Powell told us: [su_quote] You don't have to have money, but someone has to. Raising money is at the core of what we do.[/su_quote]

Invest in Your Own Home

Before you start investing in real estate to generate residual income, you'll want to buy your own home. Owning your own home reduces the impact of inflation and is one of the greatest factors in building wealth.  61.9% of households own a home, while the median household net worth is $140,800. Just by owning your own home, you’ll be building more wealth than 50% of the population. If you don't already own a home, you can qualify for a first time homebuyer credit and buy a 4-plex to earn rental income on your first real estate investment. You'll be glad you own a primary residence because regular income rarely outpaces inflation for the majority of the population. If you have a mortgage payment locked in for the rest of your life, you build wealth as your wages increase. [su_note note_color="#dbeafc"]

I was talking to a friend the other day about renting vs owning and it really illuminated how important this is. He bought his home in 2018 and is paying around $800 per month. Meanwhile, I rent and have seen my rent go up from $800 to $1,200, which means I’ve spent an extra $11,472 in the last four years. [su_table responsive="yes" alternate="no" fixed="yes"]

Savings from Ownership vs Renting
2019	$1,140.00
2020	$1,740.00
2021	$3,792.00
2022	$4,800.00
Total	$11,472.00

[/su_table] [/su_note]

Consider House Hacking

Many people find living near their work too costly, so they buy local real estate with multiple units. If you buy a quad-plex and live in one unit, you still qualify for the first-time homebuyer credit, can reap the tax benefits, and have reduced income requirements.  Here's an example of how it works for a $555,000 single-family home vs a quadplex:  *According to my lender, the maximum suggested debt/income ratio is 45%. If you have other outstanding credit, the income needed will be higher. So effectively, you can cut the amount of income you need by over $5,000.

Buy Rental Properties

6.9% of the population owns rental properties. Furthermore, those who own rental properties have an average of $175,000 more net worth than those who don't. Plus, they get additional cash flow from the rental properties. Emma told us: [su_quote] Low volatility rental properties include warehouses, self-storage, and multi-family units, while single family rentals have a little more volatility. Offices and other buildings have the highest volatility.[/su_quote] You'll need to consider whether each rental property justifies the expense. Most real estate investors say they expect owning rental properties to generate a 15% return on investment for each rental property.

House Flipping

If you have skill at repairing properties, you might want to buy real estate that needs repairs for less than the going rate in the area, fix them up, and sell them.  Santino Fillipelli runs a construction company, real estate brokerage, and real estate investment company. He buys homes to flip or repair and rent. Find out his approach to real estate investing. [su_youtube url="https://youtu.be/qhvLB-MtVnY"] To make any of these a more passive investment, you can consider hiring a property manager to assist you with them. It will reduce your profits and tax deductions, but it's easier than managing it yourself.

Step 4. How to invest in real estate without buying property

The following ideas are ways to invest in real estate without buying property. These are good for those who are not ready to make the commitment of buying a property and renting it out.

Airbnb Co-Hosting

If you want to get into the real estate market without direct real estate investments, Airbnb allows co-hosting. Co-hosting works really well if you own a cleaning business, handyman company, or general contracting business. You just negotiate a deal to act as a property management company and take a percentage of revenue from the investment property owner. Chris Mondragon makes money from real estate properties by managing their cleaning and greeting customers—all while making over $1M per year as a cleaning business. Find out more about managing Airbnbs as a service company below: If property management doesn't sound right for you, keep reading for more real estate investment opportunities.

Real Estate Investment Trusts (REIT): How to Invest in Real Estate Stocks

One of the least expensive ways to get into real estate is real estate investment trusts. These companies are effectively real estate crowdfunding. A real estate investment trust sells shares and buys property. They then pay the investors the profits from the rental payments.  REITs may be sold on the stock market or be privately listed. The publicly traded REITs tend to produce lower returns but are easier to sell. You will normally need to be an accredited investor to access privately held REITs.  The following table consists of 27 REITs that are currently generating income of more than 8% based on a screener using TD Ameritrade on 9/3/2022. (I have not done further research to evaluate the quality of these real estate investment opportunities. Please remember to do your own research before buying.)

Symbol	Company Name	Dividend Yield	Price
CDR-B	Cedar Realty Trust Inc	16.57%	$ 10.94
CDR-C	Cedar Realty Trust Inc	15.30%	$ 10.62
SQFT	Presidio Property Trust Inc	13.48%	$   3.15
OPI	Office Properties Income Trust	12.53%	$ 17.56
GNL	Global Net Lease Inc	12.03%	$ 13.30
RTL	Necessity Retail REIT Inc	11.68%	$  7.28
NYC	New York City REIT Inc	11.66%	$  3.43
AHT-I	Ashford Hospitality Trust Inc	10.41%	$ 18.01
AHT-F	Ashford Hospitality Trust Inc	10.35%	$ 17.81
AHT-G	Ashford Hospitality Trust Inc	10.30%	$ 17.90
AHT-H	Ashford Hospitality Trust Inc	9.98%	$ 18.78
MDRR	Medalist Diversified REIT Inc	9.80%	$  0.82
BDN	Brandywine Realty Trust	9.52%	$  7.98
GIPR	Generation Income Properties Inc	9.15%	$  7.08
CORR	Corenergy Infrastructure Trust Inc	8.97%	$  2.23
AHT-D	Ashford Hospitality Trust Inc	8.94%	$ 23.64
IIPR-A	Innovative Industrial Properties Inc	8.43%	$ 26.70
SLG	SL Green Realty Corp	8.41%	$ 44.36
BTBIF	BTB Real Estate Investment Trust	8.39%	$  2.73
BHR-B	Braemar Hotels & Resorts Inc	8.36%	$ 16.44
OHI	Omega Healthcare Investors Inc	8.30%	$ 32.28
INN-E	Summit Hotel Properties Inc	8.25%	$ 18.94
SBRA	Sabra Health Care REIT Inc	8.13%	$ 14.76
VNO	Vornado Realty Trust	8.11%	$ 26.13
MPW	Medical Properties Trust Inc	8.10%	$ 14.32
GOOD	Gladstone Commercial Corporation	8.06%	$ 18.67
BHR-D	Braemar Hotels & Resorts Inc	8.01%	$ 25.75

Real Estate Investment Groups (REIG)

Real estate investment groups buy large properties like office buildings, multi-unit buildings, and shopping centers. The REIG can invest in real estate and earn profits from various real estate investment strategies:

• Acting as a property manager
• Flipping houses
• Running Airbnbs 
• Financing building projects 

A real estate investment group will not normally qualify for REIT status, but it can capitalize on a wider variety of real estate investing opportunities than REITs.

Real Estate Limited Partnerships (RELP)

Limited partnerships are a type of private equity where you have a general partner who will manage properties and limited partners who indirectly own the real estate property. Most of the income generated is from the sale of properties, but they may generate passive income if the cash flow and profits are high enough to justify routine payouts. The minimum investment will normally be $2,000+, but it is common to require buy-ins of $100,000 to $1 million.

Real Estate Mutual Funds

Mutual funds are real estate investment tools that help you get exposure to multiple real estate stocks. These make it easier to invest in an industry without analyzing particular stocks.  These funds normally have minimum investments between $500 and $2,000, and you can add additional investments regularly. Mutual funds have expense ratios ranging from .03% to 4%. The higher the percentage, the higher the gains have to be to develop wealth. I personally prefer ETFs, but review this article if you want to find good real estate mutual funds.

Real Estate Exchange Traded Funds (ETFs)

If you’re ready to start real estate investing but want to maintain diversification within the industry, real estate index funds are a good way to get started. Real estate ETFs buy shares of companies involved in the industry and then sell ETFs that give you a percentage of the ownership of all the holdings. These are basically mutual funds with much lower minimum investments, lower fees, and are tradeable on the stock market. I've compiled the top 20 real estate ETFs based on the Distribution Yield on 9/3/2022. (These real estate funds are not investment advice. Make sure you research each before you invest.)

Symbol	Name	Morningstar Category	Current Price	Net Expense Ratio	Distribution Yield	Real Estate Exposure
SDIV	Global X SuperDividendâ„¢ ETF	Global Small/Mid Stock	$8.81	0.58%	12.87%	37.45%
MORT	VanEck Mortgage REIT Income ETF	Real Estate	$14.13	0.41%	9.98%	100.00%
HYIN	WisdomTree Alternative Income Fund	Nontraditional Bond	$19.97	2.93%	9.52%	68.38%
KBWD	Invesco KBW High Dividend Yld Fincl ETF	Financial	$16.93	2.59%	9.01%	40.46%
VNQI	Vanguard Global ex-US Real Est ETF	Global Real Estate	$42.57	0.12%	7.61%	98.94%
ALTY	Global X Alternative Income ETF	Allocation--70% to 85% Equity	$11.66	0.50%	7.60%	33.00%
DRN	Direxion Daily Real Estate Bull 3X ETF	Trading--Leveraged Equity	$14.52	0.96%	7.42%	100.00%
REM	iShares Mortgage Real Estate Capped ETF	Real Estate	$27.73	0.48%	7.00%	100.00%
SRET	Global X SuperDividend® REIT ETF	Real Estate	$8.10	0.58%	6.86%	100.00%
MDIV	Multi-Asset Diversified Income ETF	Allocation--50% to 70% Equity	$15.72	0.69%	5.59%	31.99%
KBWY	Invesco KBW Premium Yield Eq REIT ETF	Real Estate	$21.72	0.35%	5.49%	100.00%
RWX	SPDR® Dow Jones International RelEst ETF	Global Real Estate	$27.34	0.59%	5.49%	99.86%
XSHD	Invesco S&P SmallCap Hi Div Low Vol ETF	Small Value	$18.65	0.30%	5.06%	45.82%
WTRE	WisdomTree New Economy Real Estate ETF	Global Real Estate	$18.03	0.58%	4.84%	81.77%
GYLD	Arrow Dow Jones Global Yield ETF	Global Allocation	$13.15	0.75%	4.76%	41.87%
WPS	iShares International Dev Prpty ETF	Global Real Estate	$28.31	0.48%	4.69%	99.35%
GBLD	Invesco MSCI Green Building ETF	Global Real Estate	$17.95	0.39%	4.40%	94.58%
RDOG	ALPS REIT Dividend Dogs ETF	Real Estate	$42.56	0.35%	4.33%	100.00%
ROOF	IQ US Real Estate Small Cap ETF	Real Estate	$21.32	0.70%	4.28%	100.00%

Crowdfunding Real Estate Investing Platforms

Real estate crowdfunding has become an easy way for a new real estate investor to enter the market. The following companies are some of the best real estate crowdfunding platforms.  I have ranked the online real estate platforms based on the investment minimum. Obviously, this should not be taken as financial advice, but the following strategy is something to consider:

1. Start with Fundrise to get familiar with how real estate investments work.
2. Reinvest dividends.
3. Build up to YieldStreet for potentially lower fees.
4. Once you reach $5,000, go for RealtyMogul or Equity Multiple.
5. Build up to CrowdStreet.
6. Keep repeating until you decide which ones you like better and focus on them. 

Industry Name	Minimum Account	Fees	Must Be Accredited Real Estate Investor?	Dividend Reinvestment Program
Fundrise	$10	1% (There may be other fees.)	No	Yes
YieldStreet	$500	0-2.5% (There may be other fees.)	No	Yes
Modiv	$1,000	3% (There may be other fees.)	No	Yes
EquityMultiple	$5,000	.5%-1.5% (There may be other fees.)	No for REIT, yes for individual property investment	No
RealtyMogul	$5,000	1-1.20% (There may be other fees.)	No for REIT, yes for individual property investment	No
CrowdStreet	$25,000	.5%-2.5% (There may be other fees.)	Yes	No

These real estate crowdfunding opportunities offer both private REITs and the ability to finance projects. All are private equity so they are not highly liquid like publicly offered REITs. Expect to hold them for three to five years.

Step 5. Get real estate software

Emma gave us a lot of advice about software. We asked her what the best tools to manage real estate investments are. She told us: [su_quote] Pencil and Paper or a spreadsheet. It doesn't have to be fully optimized.[/su_quote] She went on to explain: [su_quote] From a software standpoint, an investor management platform is most important.[/su_quote] She recommended the following software:

• Syndication Pro: Publish offerings, automate distributions, and manage investors with this CRM that meets SEC compliance issues.
• Active Campaign: Automation software is good for those who need a custom automation that isn't included in Syndication Pro.
• REI Blackbook: While Syndication Pro is intended for managing investors, REI Blackbook is meant for wholesaling, renting, and flipping properties.

If you do a little of all types of real estate, you can use the three together.

Step 6. Find real estate investors

Thach told us a lot of his success is because: [su_quote] I’m a social media fanatic. I post 7 days a week. I post 2 videos each day on TikTok, 2 on Instagram, and 2 on Facebook live. Then once a week I post on YouTube. I just tell them everything I learn on my real estate journey.[/su_quote] Emma agrees that social media is the best way to position your real estate investment group as subject matter experts. [su_quote] Networking is the most important skill.[/su_quote] She discussed the website as one of the most important tools to find investors.

Website

Emma suggested three specific portions of the website she finds critical: [su_quote]

• Hire a professional photographer for your website.
• Include a bold vision statement and a bold picture in the home page banner.
• The ‘about me’ page should answer, ‘What are you going to do for them?’

[/su_quote]

Step 7. Keep growing your investments

You'll want to take the profits and reinvest them. This concept is called compounding, and it builds net worth fast.  If you take $100K and reinvest 15% profit each year, you'll have over $6.5 million after 30 years. If you only reinvest 10%, the value drops to $1.75 million after 30 years. Meanwhile, just the growth from the appreciation of the asset would theoretically be worth around $400K if the historical national home price values continue. Mike Andes told us: [su_quote] What can you do to add value to make it worth more? Add a unit? Rent it as an Airbnb? There's always opportunity![/su_quote] Check out our interview with him below. [su_youtube url="https://www.youtube.com/watch?v=AXeqIxPVn6A"]

Can I Invest Just $100 in Real Estate?

Yes! REITs, ETFs, and Fundrise are ways to generate income without owning real estate. Don't wait to build wealth and cash flow just because you don't have the income and credit score to finance properties on your own and make mortgage payments.

How to invest in real estate with no money and bad credit

Learn how to wholesale real estate. Find distressed properties. Make an offer to help the homeowner sell their property, and sell the single-family home to other investors for a profit.  This is a form of flipping houses that doesn't require cash reserves or a real estate license. Learn how to wholesale real estate.

How to invest in real estate with little money

If you're looking for ways to invest in real estate with small amounts of money, you'll want to limit your considerations to a mutual fund, ETF, REITs, or other financial instruments that lets you build a real estate portfolio without a massive down payment.

How do beginners make money in real estate?

I'd suggest using house hacking. Above, we analyzed the returns of buying a house as an investment versus buying a quadplex. We found that spending $555K on a quadplex with 3% down would:

1. Reduce your personal expenditure on housing by nearly 75%.
2. Build equity faster because you are only paying $1 for every $4 purchased.
3. Give you the ability to buy another quadplex within the first five years.

Which Investment Is Best in Real Estate?

Emma told us: [su_quote] Self storage, warehouse, and multi-family are low volatility investment real estate.[/su_quote] She also warned that offices and single family homes are at higher risk, but it's still better owning properties than not. A multi-unit building is normally the safest real estate investment. This includes buildings like apartment complexes. Everyone needs a roof over their head, and the chances of owning a completely vacant apartment complex are slim.  That means there's less volatility than investing in a single-family home because you have multiple tenants paying rent. If you own a single-family home and the tenant doesn't pay rent, you have to cover the monthly mortgage payment and property taxes. If you can't, you risk defaulting.

How to Invest in Real Estate Book Options

Grab your favorite beverage and read up on how to invest money in real estate. Here are some Amazon best sellers:

• Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple by David M Greene
• How to be a Real Estate Investor by Phil Pustejovsky
• The Book on Rental Property Investing: How to Create Wealth With Intelligent Buy and Hold Real Estate Investing by Brandon Turner

A Few Words of Caution

While real estate investment is enticing for its profitable returns, industry experts recommend having a diversified portfolio to increase your net worth. Different industries and segments perform better at different points in the economic cycle. That means that you don't want to focus 100% of your net worth on real estate investments. The median household only has about 35% of its net worth in real estate. Make sure to remember: [su_note note_color="#dbeafc"]

• Many financial instruments are governed by the Securities and Exchange Commission.
• Past performance does not predict future performance.
• After-tax profits are more meaningful than pre-tax profits.
• Talk to a financial consultant to evaluate how to buy property within your financial scenario.
• Avoid high fees.[/su_note]

So What's the Best Way to Invest in Real Estate?

The best way to invest in real estate will depend on your personal situation and local market. We’ve given you information on:

1. Defining Investment Objectives
2. Property Investment Taxes
3. Traditional Real Estate Investing
4. Equity Investments
5. Online Real Estate Platforms
6. Growing Your Investment Properties

For a step-by-step guide to developing your rental portfolio, we highly recommend Thach's course, which covers all of the above and more. Now it’s up to you to decide how you want to start investing in property. What method of real estate investment do you prefer?

Do you want to buy a franchise?  Nic Reed and Sanford Booth have both purchased franchises, while Mike Andes has sold around 70 franchises. Nic and Mike share their experience in franchising at Augusta Lawn Care, while Sanford Booth shares his experience buying a Big Frog franchise. We’ll explain the process of finding a good franchise, preparing to reach out to the franchisor, creating the documents you need, getting financing, attending a discovery day, and preparing to operate the company well.

What is a franchise?

A franchise is a business model with which the franchise owner, known as the franchisor, allows business owners to run a franchise location using their business processes, suppliers, and company name in exchange for paying franchise fees.

How is a franchise different from a chain?

There are several important differences between a franchise and a chain. A chain is owned by a single business entity, while a franchise is typically owned by multiple different business entities. A franchise may have corporate stores as well. For instance, Augusta Lawn Care’s Founder Mike Andes owns multiple corporate locations as well as offers franchises. He told us: [su_quote]I use my corporate stores to test new processes before passing them on to the franchisees.[/su_quote] Check out the video below that explains the differences between buying a franchise and starting your own business.  [su_youtube url="https://www.youtube.com/watch?v=MTnmagGo32Q&t=1085s"]

Where can I find the laws governing franchising?

Franchises are governed by the Federal Trade Commission (FTC). They specify:

• The features of a business that qualifies as a franchise:
  • Promises to provide a trademark or other commercial symbol 
  • Promises to exercise significant control or provide significant assistance in the operation of the business 
  • Requires a minimum payment of at least $500 during the first six months of operations. 
• The laws franchises must follow.
• The items included in the Franchise Disclosure Document
• The items included in the Franchise Agreement.

Make sure to read the FTC guidance before buying a franchise. Keep reading for the pros and cons of buying a franchise.

Pros and Cons of Owning a Franchise

As Mike told us, franchise ownership is not for everyone. There are some people that prefer to figure out everything and some who just want to increase their earnings without investing a lot of time learning. Let’s look at the pros and cons of owning a franchise. [su_note note_color="#dbeafc"] Pros

1. All the systems in place
2. Less to figure out
3. Built-in mentors available
4. More defined profit expectations
5. Might have built-in customers

Cons

1. Higher startup costs
2. Requires less creativity
3. Business strategies might not work in your area
4. Annual or monthly franchise fees
5. Service area is often dictated by the franchisor

[/su_note] Check out our interview with Nic Reed to learn more about the benefits of owning a franchise location. He told us: [su_quote]The nice thing about a franchise is I don’t have to figure out all the processes. Mike’s already done that. I just have to use his resources and see which (ones) work best in my market.[/su_quote] [su_youtube url="https://www.youtube.com/watch?v=9HwEN2uQlxM"] Keep reading to learn more about the franchise buying process.

How to Buy a Franchise You Love

When considering a franchise system, you’ll need to follow a specific process. There are nine steps to follow when buying a franchise:

1. Research Franchises.
2. Request the Franchise Disclosure Document.
3. Go to Discovery Day.
4. Apply for Financing.
5. Review and Return the Franchise Agreement.
6. Buy or Rent a Location.
7. Get Training and Support.
8. Prepare for the Grand Opening.
9. Operate the Franchise.

Let’s start by researching franchise businesses.

Step 1. Research Franchises

Like any small business owner, someone who wants to own a franchise should do their research first. Opening a franchise is a huge commitment and the franchisor does a thorough review of each potential franchisee to make sure they meet the requirements to be successful. You’ll want to be aware of typical franchise requirements and how to find good franchises. We’ll look at both to help you find the perfect franchise for you to start as a small business.

Typical Franchise Qualification Requirements

Prospective franchisees should be aware of the following requirements that most franchisors require:

• Credit score: Most franchisors will require a minimum credit score. If you have a 680 or better, you shouldn’t have an issue. Use Credit Karma to check your credit score.
• Net worth: Most franchise owners will require a minimum net worth of at least $100K, but estimates suggest that a new Mcdonald's costs $2.3 million. It’s gotten so high, they only let new franchisees buy an existing franchise.
• Liquid assets: You have to have enough liquid assets to pay the franchise fee without financing unless you are approved by franchise financing. 
• Other income: If you want your own franchise, you’ll need outside income. It can take six months to a year without revenue. During that time you have to be able to cover the costs of opening a franchise.
• Industry experience: You may need experience in the industry. If you don’t have it, you might want to go work in the industry before buying a franchise.
• Management experience: Franchise owners may want prospective franchisees to have management experience because it improves the likelihood of becoming a successful franchisee.

Make sure to have documentation of your financial situation and experience ready before researching franchise opportunities. Each particular franchise has different requirements. Don’t spend a lot of time applying to become a franchisee Keep reading to learn how to use the International Franchise Association (IFA) to evaluate franchise opportunities.

Check the International Franchise Association

The IFA has a database that helps people find the right franchise out of more than 1,400 opportunities across the globe. The franchise search can be sorted by:

• Industry: There are 15 choices including cleaning, business services, senior care, and food-related franchises.
• Location: Global or any continent other than Antarctica.
• Investment amount: $0 to $1 million. Make sure to reduce the highest amount unless you have $1 million to invest.
• Opportunities for the military: Some franchise business opportunities offer benefits for Veterans.

Once you conduct a search, you can view different franchise business opportunities by age, startup costs, veteran discount ranking, or alphabetically.  Be aware that some companies try to hide their franchise fee behind the total investment. There are some with no startup costs, but they might have total investments of $400K+. Meanwhile, most include their website information as well as startup and initial costs. The point of mentioning this is that some franchised business opportunities are more disclosive than others. It is always easier to work with a management team that is fully disclosive. I personally would not consider a franchise opportunity that is not. You’ll want to go through the franchise website and establish whether they are:

• An established brand: Look at the number of followers on social media accounts and the reviews on sites like Google and TrustPilot.
• Oversaturated: Do they have too much competition in your area?
• Disclosive about their fees: Some will openly disclose their initial fee, royalty fees, marketing fees, and other costs on their site. Others won’t.
• Offering training and support: Most franchises offer some business training and support to new franchise owners. It will normally be governed by the company culture and age of the franchise.

You can also try looking at some of these easy-to-buy franchises.

Easiest Franchises to Buy

The easiest franchises to start are typically:

• Home and Business Cleaning: Maid Pro, The Maids, Maid Simple
• Lawn Care: Augusta Lawn Care: Augusta Lawn Care,
• T-shirt and Sign Printing: Big Frog, Fast Signs

Mike told us: [su_quote]If someone works for an Augusta Lawn Care franchise for a couple of years, they qualify to buy a franchise without paying the initial franchise fee.[/su_quote] Once you have narrowed it down to one or two franchises, you can reach out to them to request the Franchise Disclosure Document.

Step 2. Request the Franchise Disclosure Document

This step includes gathering information that is not readily available unless the company is a publicly held company. The FTC  Franchise Rule requires a Franchise Disclosure Document that includes 23 items.

Necessary Elements in a Franchise Disclosure Document

1. Company history, predecessors, parent companies, and affiliates.
2. Officers’, directors’, and executives’ professional history.
3. Current and past litigation involving the company and major players in the organization.
4. Franchisor and management bankruptcies if any.
5. Initial franchise fees and what impacts their costs.
6. Ongoing costs such as royalty fees or marketing fees.
7. The initial investment to get the franchise fully operational (in table form).
8. Purchasing restrictions for equipment and supplies.
9. List of franchisee’s obligations including a table showing where each obligation is in the Franchise Agreement.
10. Terms and conditions of financing through the franchisor (if any).
11. Any assistance the franchisor will provide including advertising, computer systems, and training.
12. Description of the geographical territory the franchisee receives and whether it can be modified.
13. How the brand’s trademark(s), service and trade names may be used by the franchisee.
14. How the franchisee can use copyrights, patents, and other information.
15. What, if any, participation requirements are expected of the franchisee. 
16. Restrictions on products and services the franchisee may participate in.
17. How to renew, transfer, and terminate the business arrangement. Also how to dispute conflicts between the franchisor and franchisee.
18. Public figures that are employed by the franchisor and how much they are paid.
19. Optional unit financial performance information.
20. Location and contact information of all existing franchise locations.
21. Audited financial statements for the past three years. 
22. All the contracts that will be part of the formal contract including:
    1.  Franchise Agreement
    2.  Non-Disclosure Agreement (maybe)
    3. Non-Compete Agreement (likely)
    4. Supplier Agreements (common)
23. Confirmation of receiving the FDD.

Most franchises will have a contact form on their website. Others may request an initial consultation before providing the Franchise Disclosure Document.  When considering starting a franchise, you should review all of this information before going for a discovery day.

Step 3. Go to Discovery Day

Discovery day is when you go to the corporate headquarters to meet the franchisor and their team. They show you around, explain how they operate, and give you more information on the business.  A business owner should be looking for indications whether the franchise ownership is legit or just trying to make money through the franchise fee. Indications that the franchise opportunity may not be as attractive as it is on paper include:

• Personality clashes
• Cultural differences 
• Corporate office being unprepared for the business owner
• Statements that are not in the Franchise Disclosure Document
• Not answering questions directly
• Failing to address concerns
• Pressuring you to enter a franchise agreement

If you’re ready to move forward, the next step is to focus on how to buy a franchise.

Step 4. Apply for financing

The process to buy a franchise is similar to buying a business. It is easier to get a small business loan for a franchise because they already have a proven success record.  The franchisor may already have a deal with a bank to offer a small business loan to their new franchisee. When applying you will need to have:

• A business plan
• Documentation of personal finances
• FDD to show lenders the average annual income and financial risk of the franchise
• Proof of any assets you want to use for a secured loan

There are multiple options for funding when you decide you want to own a franchise. Some of the most common include:

• Liquid capital: Using cash, stock, and bonds to finance your business
• Secured loans: Using assets like a home, stocks, or crypto to secure a loan.
• Business partners: The franchise contract might limit this option.
• Business line of credit: Revolving credit that lets you borrow as needed and pay interest only on the amount outstanding. Great for preventing cash flow issues involving inventory and payroll.
• Equipment financing: For large purchases like kitchen equipment.
• Traditional business loans: 3-5 year loans to buy a business.
• SBA loans: We’ll discuss using an SBA loan to buy business startups and franchises below.

Check out our Hub article for a more detailed look at how to fund a business or keep reading to learn about loans from the Small Business Administration.

Apply for Small Business Administration Loan 

The U.S. Small Business Administration guarantees loans called SBA loans. These small business loans have some of the most favorable lending terms because they are backed by the faith of the US government.  When wondering how to get an SBA loan to buy a business or franchise, you’ll want to review the SBA’s guide. Three main types of SBA loans are available:

1. (7)a loans: Up to $5 million for working capital, refinancing debt, and major purchases.
2. 504 loans: Up to $5 million for construction projects, land, and equipment.
3. Microloans: Up to $50,000 and cannot be used for construction or debt.

You’ll have to exhaust all other options before qualifying for SBA loans, but if you qualify they are definitely one of the best ways to buy a business.  As long as you qualify for the funding, the next step in how to become a franchise owner is to review and return the franchise agreement. If you don’t qualify, then you’ll need to rebuild your credit, earn more revenue, or sell assets before you can buy a franchise.

Step 5. Review and Return the Franchise Agreement

You’re ready to be your own boss. You just need to review the franchising agreement. Franchise agreements are very similar to the FDD, but they are legally binding contracts between the franchisor and franchisee. If you haven’t already been working with a franchise attorney or other franchise consultants, you should probably hire someone who is well versed in franchise law. Any required fees will be well spent in exchange for professional help when you are learning how to start a franchise business. Franchising.com lists the 10 provisions in Franchise Agreements. These elements are the parts of the FDD that both parties are contractually obligated to follow:

1. Location or territory: What are your territory boundaries and exclusivity clauses? These will impact where to implement your marketing strategies and where you can do business.
2. Operations: What operating procedures do you have to follow to own a franchise? The operations policies are a major portion of why people consider buying franchises. These are the best practices that take time and money to develop when starting from scratch.
3. Training and ongoing support: What training and ongoing support is provided, who pays for it, and how much does it cost? Each program may be different, but the goal here is for you to be capable of running the business when you open the doors.
4. Duration: How long is the contract valid? 
5. Franchise fee or investment: What is the upfront cost and what does it cover? You should probably calculate the payback period based on other franchisors' experience.
6. Royalties or ongoing fees: What are the terms of ongoing fees and what do they cover? 
7. Trademark, patent, signage: How are you allowed to use the franchisor's trademark, patent, logo, and signage?
8. Advertising, marketing: What advertising does the franchisor pay, and what advertising does the franchisee pay? If they require more than 8% of revenue for marketing, you might want to be cautious.
9. Renewal rights, termination, and cancellation policies: How is the franchising contract renewed or terminated by each party? How are legal disputes handled?
10. Exit strategies: Does the franchisee have the right to put existing franchises up for sale? Does the franchisor have to approve the sale of a franchise? Does the franchise have to let the franchisor offer a buyback? Is the only way to sell the franchise through the franchisor?

This is the last real chance you have to decide to back out of the agreement. Review the agreement documentation against the FDD with a legal representative. If there are any red flags, you may want to consider whether the opportunity is the best franchise to own. Keep reading for information on how to buy a business location.

Step 6. Buy or Rent a Location

If you haven’t already, this is when you really have to ask, “How do franchises work?” and begin understanding what it means to operate one. When buying or renting a business location, ask the franchise to help with considering options.  Some may tell you that increased foot traffic is best, while another business system might suggest you go with the lowest cost per square foot. Meanwhile, According to their 2020 Annual Report, McDonald's owns 55% of the land and 80% of the buildings that franchisees utilize. There will be different considerations based on whether you are operating a retail establishment, office building, restaurant, manufacturing, or service and install company.  Read our blog about choosing a business location for more information.

Step 7. Get Training and Support

You’ll have to go to the corporate training to learn how to operate the business. Corporate training can be anywhere from a couple of days to several weeks. They’ll typically cover:

• Where to find resources
• How to perform the customer-centric functions of the business
• Introduce you to the software they use
• Walk you through the accounting process
• Train you on any machines that are unique to the company
• Marketing tasks

After that, you’ll be preparing for the grand opening.

Step 8. Prepare for the Grand Opening

Now you can prepare the franchise location for opening day. There will be three aspects of opening the franchise:

1. The location
2. The inventory
3. Marketing and advertising

Except for choosing the final layout, major preparations will likely be conducted by construction crews. I would discourage completing your own construction work unless you are well-versed in permits, building parameters, and timelines for such tasks.  The layout may be driven by the franchisor or by you. Make sure you follow any requirements the franchisor has.  Inventory should be entirely specified by the corporate office when opening. Afterward, they might allow you to make decisions about how to run the most profitable franchise in your location. They might have the inventory fully automated as well.  You might have guidance from the franchisor about marketing, advertising, and setup, or you might need to reach out to other franchise owners to ask them what worked and didn’t work when they opened their specific franchise. Remember to focus on getting the word out so when someone asks you, “How much do franchise owners make?” you can reassure them that it is worth it. You’ve learned how to own a franchise, but there is still one more step. You have to operate it.

Step 9. Operate the Franchise

Once you reach this stage, you are just operating a business like any other. You’ll be serving customers, managing employees, handling accounting, marketing, and filing taxes. We have a ton of interviews with franchise owners. Big Frog is a clothing printer that can give insight on how to own a franchise. Check out our interview with him below. [su_youtube url="https://www.youtube.com/watch?v=BmYCYMAsQ8Y"]

Buying a Franchise FAQs

Should you buy an existing franchise?

Yes, if it’s profitable. When you buy an existing franchise, remember to ask a lot of questions. Some franchise owners, like McDonald’s, will only let new owners buy an existing franchise because they want successful (experienced) franchisees to open new stores. Ask the following questions before buying an existing franchise:

1. Why are you selling your franchise?
2. How long have you owned the franchise?
3. Why did you originally buy the franchise?
4. What’s the annual gross revenue? Is it growing or shrinking?
5. How much profit have you made over the years? Is it growing or shrinking?

We include these questions and more in our blog 41 Essential Questions To Ask when buying a business. I suggest reading it for more information on why the questions are important.

What investment costs and franchise fees should I consider?

Initial investment costs are the costs that occur before the franchise draws revenue, but the franchise fees are what you pay directly to the franchisor. Initial investment costs can include:

• The franchise fee
• Forming an LLC or a Corporation
• Business licensing
• Buying or renting a location
• Remodeling
• Purchasing equipment
• Purchasing inventory
• Software not provided by the franchisor
• Furniture for the franchise location 
• Insurance
• Marketing
• Travel costs

What if I want to buy a franchise without money?

Most will not let you. They expect some actual investment. If you find one let us know, but franchises have requirements for:

• Credit
• Net worth
• Liquid assets

If you have a high net worth but low liquid assets, consider getting a secured loan or creating a corporation with a rollover business startup (ROBS).

How much does it cost to buy a McDonald's franchise?

According to the 2020 McDonald’s Annual Report, total development costs to open a new restaurant were approximately $4.4 million, but McDonald’s pays that and rents the equipment and land to the franchisee with a 20 year agreement.  McDonald's does not sell new franchises to new franchisees because they believe it protects their business to have experienced franchise owners open new locations. You’ll find a ton of answers online saying $45,000 franchise fee and $500,000 of liquid assets.  In addition, you’ll be paying a 4% per year royalty to purchase a McD’s.

How much money can I make by owning a franchise?

Each year most franchisees make between $50,000 and $100,000 per franchise location they own. 

How should I prepare to buy a franchise?

Learn as much as you can before approaching the franchisor. Then prepare your financial statements that prove credit score, net worth, and liquid assets.

How does buying a franchise save money?

Buying a franchise removes most of the learning phase of business development. The franchisor has already:

1. Created a business plan.
2. Created branding.
3. Conducted market research.
4. Conducted product research.
5. Created the business systems.
6. Created a successful marketing plan.
7. Proven the business model successful.
8. Created the processes to follow.

All you have to do is find customers in your area and follow the rules.

Live Wealthily Ever After

At this point, we’ve discussed everything from choosing a certain franchise to writing a business plan, how to get an SBA loan to buy business assets, and the documents you’ll see when buying a franchise. Once you’ve got a few years under your belt, you can start thinking about how to expand, hire more people, or buy more franchises. At this point, you have the information to start buying a franchise.  What franchises would you like us to interview?

Ever wondered how some small businesses are making millions even though the small business owner appears to be on a never-ending vacation?

They are making a living participating in some of the best small business ideas from home. Home-based business ideas can be extraordinarily successful. We’ve interviewed small business owners who’ve made millions in all types of businesses.

By the end of this article, you’ll have dozens of ideas for businesses you can run from your own home and be ready to take your first steps toward launching your successful home-based business.

[su_note note_color="#dbeafc"]

We’re going to share some of the most successful work-from-home ideas and answer some commonly asked questions, including the following. (Click any of the links to jump to the section that interests you most.)

• Work-From-Home Business Benefits
• Work-From-Home Business Drawbacks
• What Makes Successful Home-Based Businesses?
  • Training Required
  • Initial Investment
  • Managing Inventory
  • Web-Based Potential
  • Staffing
• 27 Profitable Home Business Ideas
• How to Start a Home Business
• Choose Your Own Business Idea [/su_note]

Work-From-Home Business Benefits

According to Indeed, home businesses are beneficial because they:

• Streamline communication: When you work from home, you will have documentation of all business communication at your fingertips all the time.
• Increase productivity: You won’t waste time driving to work every day.
• Expand your talent pool: Provides access to a global workforce if you hire employees who can work remotely.
• Save time: Driving to work, getting dressed, preparing a lunch then taking a lunch break all take time that can be reduced or eliminated with at-home businesses.
• Removes job barriers: Some people don’t have cars. Those without cars have more opportunities with work-from-home businesses.
• Provides more comfort: People buy what makes them comfortable, while businesses buy what gets the job done. A business from home combines the two.
• Increases freedom: Running your business from home means you can set your work hours or even work while on vacation. Local businesses without employees are an exception to this point.
• Increase job satisfaction: All the things I listed above increase job satisfaction.
• Reduce turnover rate: Small business owners with remote employees will have lower turnover because the employees have more freedom.
• Reduce overhead costs: Combine lower turnover with less space requirements and the ability to deduct part of your home expenses as business expenses to reduce overhead costs.
• Improve brand reputation: A more satisfied workforce will make customers happier and improve your brand.
• Provide global insights: Employees from all over the world can share their experiences.
• Enhance sustainability goals: Working from home reduces almost all carbon dioxide emissions compared to the average commute to a place of business.
• Increase business hours: If you have employees, they’ll likely be in different time zones, meaning you can support your customers more hours of the day.

Meanwhile, there are some disadvantages of working at home that we’ll discuss next.

Work-From-Home Business Drawbacks

While we all love the freedom to work when and where we want, home business owners may face:

• Reduced learning opportunities: Interacting with people often means learning new things. When you run a business from home, your interactions with others decrease.
• Missed social interactions: Many people make friends with their employees and coworkers, but you might never meet them if you run a home business.
• Lost innovation opportunities: The dynamics when people with different expertise get in the same room can lead to huge jumps in innovation, and that’s unlikely to happen when you start a home business.
• At-home distractions: People at home are hopefully fun to be around, so they’ll probably distract you.

What Makes Successful Home-Based Businesses?

Home business ideas need to have certain characteristics to be successful. The main things you need to consider are:

• Training required
• Initial investment
• Managing inventory
• Web-based potential
• Staffing

Training Required

Starting a home-based business idea that you don’t have any experience in can be difficult. The more training you need, the more it will cost and the longer it will take to start a business from home.

Initial Investment

When you start your own business from home, you want it to be inexpensive to start. Low startup costs make it easier to become profitable. Ideally, you should be able to start a new home business idea by purchasing a website and building your company from there.

Managing Inventory

You don’t want a small business idea that requires a lot of space for inventory. If you’re going to sell products, consider a dropshipping business and have a fulfillment center manage the inventory. Alternatively, use print-on-demand.

Web-Based Potential

A home business idea will normally be an online business that relies heavily on digital marketing skills. As long as you have a computer, you should be able to start your home business idea for under $1,000.

Staffing

A home-based business idea that needs people to work collaboratively will often be problematic because of how disconnected employees may be from each other.

Local service businesses are commonly the exception because all employees have to be in the same location. Neel Parekh found a way to run a $1.5M remote cleaning business. Find out how.

[su_youtube url="https://www.youtube.com/watch?v=kVyLriqFVdc"]

Get ready to learn about the best at-home business ideas.

27 Profitable Home Business Ideas

Job #1. Business Consultant

• Average Annual Revenue: $364K
• Average Profit Margins: 6.4%
• Startup Costs: $1K-$3.5M
• Time To Revenue: 6-18 months
• Annual Market Growth Rate: 2.2%
• Best for: Executives and business leaders, entrepreneurs with management or business expertise, people with strong analytic, problem-solving, and communication skills

According to Business Insider's 2022 report, being a business consultant ranks as the fourth most lucrative side gig. With the potential to rake in as much as $98 per hour, it stands out as one of the top-paying self-employed occupations.

A consultant's main responsibility is to assist business owners in optimizing their operations. This necessitates a solid grasp of effective business management. Many successful consultants transition into freelancing roles after amassing experience in the corporate sector or as accomplished business proprietors.

In this field, hands-on experience carries more weight than formal education. If you possess a wealth of business knowledge, a bachelor's degree (or even a high school diploma) is not a prerequisite for flourishing as an independent consultant.

Idea #2. Social Media Management

• Average Annual Revenue: $82K
• Average Profit Margins: 6.9%
• Startup Costs: $100+
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.3%
• Best for: Entrepreneurs skilled in social media, marketing strategies, data analysis, and similar areas

Social media managers will perform tasks like creating and scheduling posts, interacting with customers, and other tasks that help you interact with customers more effectively.

Idea #3. Nanny or Childcare Services

• Average Annual Revenue: $143K+
• Average Profit Margins: 0.9%
• Startup Costs: $0-$1K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 51.7%
• Best for: Teachers, tutors, babysitters, parents, caregivers, compassionate and patient entrepreneurs with strong organization and multitasking skills

Childcare services are experiencing a surge in popularity, particularly in rural regions, where nearly 60% of families lack necessary access. Even in urban settings, parents can have trouble finding dependable childcare options. This escalating demand is anticipated to fuel a Compound Annual Growth Rate (CAGR) of 12.8% for the overall childcare market until 2027.

Since its inception in 2011, Twinkle Toes Nanny Agency has expanded to encompass over 20 locations, boasting a combined annual revenue of $11.2 million. Learn about the journey of its founder, who transitioned from a role as a surgeon's assistant to achieving multi-million-dollar annual earnings.

Idea #4. Cleaning Business

• Average Annual Revenue: $74K+
• Average Profit Margins: 6.7%
• Startup Costs: $500-$30K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.2%
• Best for: Self-motivated, independent, and detail-oriented entrepreneurs

If you've set aside around $1,000 for investment, consider diving into the cleaning industry. In terms of both success rate and the ease of initiation with no prior experience, it surpasses many other self-employment concepts.

What's even better is that you can kickstart this venture solo, but you'll have the option to expand once the money starts rolling in. Picture shedding your everyday duties and running a business with the confidence of a leader. This isn't just another run-of-the-mill 9-to-5 grind.

A former guest of ours, Chris Mondragon, generated $18,220 in his second month after launching a cleaning business. He's now boasting an annual revenue of well over $1.5 million. If you're interested in learning how he achieved this, take a look at this resource.

View our interview with Chris below:

[su_youtube url="https://www.youtube.com/watch?v=YcYIYdqegGA"]

Idea #5. Software Developer

• Average Annual Revenue: $400K-$1M+
• Average Profit Margins: 14.5%
• Startup Costs: $100-$50K, depending on size and scope
• Time To Revenue: 3 months to 2 years
• Annual Market Growth Rate: 3.1%
• Best for: Coders and developers adept in programming languages, independent and self-motivated entrepreneurs with strong communication and project management skills

In 2021, the average income for a software developer exceeded $120,000. With the demand for these skills on a steady rise, there are numerous job prospects available for developers seeking conventional employment.

That said, as a developer, you can work from home for yourself by selling your programs and services directly to users and clients. Pursuing this path can lead to additional streams of passive income.

Workello initially operated as an agency connecting business leaders with freelance writing talent. However, their true potential was unlocked when they transitioned into a SaaS (Software as a Service) company. Discover the story behind their software business in this podcast episode.

Idea #6. Vending Machine Business

• Average Annual Revenue: $182K+
• Average Profit Margins: 4.3%
• Startup Cost: $2K-$10K
• Time To Revenue: 3+ months
• Annual Market Growth Rate: 0.5%
• Best for: Those who like to tinker with machines and understand mechanics and those who enjoy driving

After placing your vending machines, you'll only need a few hours per week for maintenance. Right now, our friend Adam Hill is successfully running his vending machine business, which generates six figures, while dedicating just two days a week to it.

He's achieved such remarkable success that we pestered him until he agreed to craft an insightful masterclass exclusively for our UpFlip audience. It lays out precisely how he accomplished this feat.

Check out our interview with Adam below:

[su_youtube url="https://www.youtube.com/watch?v=-s_Y-O1nosw"]

Idea #7. Virtual Assistant

• Average Annual Revenue: $35K-$50K
• Average Profit Margins: 10.5%
• Startup Costs: $100-$200
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 1.9%
• Best for: People with strong organization and communication skills, those who want to work from home and set their own hours

Your tasks as a virtual assistant may encompass activities such as responding to emails, coordinating meetings and travel plans, overseeing and posting on social media accounts, and similar responsibilities.

Initiate a virtual assistant venture online by creating a profile on a freelance platform like Upwork or 24/7 Virtual Assistant. While having fundamental computer proficiency and a dependable internet connection is essential, the most crucial attributes for virtual assistants are soft skills like dependability, effective communication, and adept multitasking. A formal education, including a bachelor's degree, is not a prerequisite for this role.

Idea #8. eCommerce Reseller Business

• Average Annual Revenue: $60K-$120K
• Average Profit Margins: 5-15%
• Startup Costs: $100-$1K
• Time To Revenue: 30-90 days
• Annual Market Growth Rate: -9.3% (based on eBay annual reports)
• Best for: People with sales and marketing skills, collectors who can spot valuable items, those seeking flexibility and the potential for passive income

Opening an online store costs less than starting a brick-and-mortar retail store. It also gives you more scheduling flexibility than many home business ideas since it doesn’t involve working with clients.

The inventory you sell will be the main cost of starting an eCommerce business as a reseller. If you have an eye for spotting hidden gems at flea markets, thrift stores, and garage sales, you can make a consistently high profit with this kind of business.

Mike Wilson started Golden State Picker with $1,000 worth of inventory and has grown that into a $30,000-a-month business. Hear how he started in this podcast interview:

Idea #9. Freelance Writer

• Average Annual Revenue: $46K
• Average Profit Margins: 14.6%
• Startup Costs: $100-$200
• Time To Revenue: 1 month to 3 years
• Annual Market Growth Rate: -1.5%
• Best for: Writers, editors, and language experts, people with SEO, marketing, and advertising knowledge, creative entrepreneurs

Are you a strong writer? Create a home business writing about the things that interest you.

Independent writers have the flexibility to engage in diverse writing projects. This spectrum includes fiction and imaginative work under your own name or as a ghostwriter. A notably lucrative avenue in freelance writing is technical writing, which boasted an average income of $75,700 in 2023.

Additionally, there's substantial demand for online content such as blog articles and promotional copy.

Idea #10. Digital Marketing

• Average Annual Revenue: $817K
• Average Profit Margins: 6.9%
• Startup Costs: $100-$10K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.3%
• Best for: Marketing and advertising pros, entrepreneurs with social media and data analysis skills, content creators

Maintaining an effective presence on social media has become imperative for many businesses today. However, not all entrepreneurs are well-versed in social media marketing. Consequently, the digital marketing industry has seen an average annual growth rate of 28.2% over the past five years.

This abundance of opportunities is what makes digital marketing stand out as one of the top home-based business concepts for those seeking flexible hours. Digital marketing extends to niches like SEO-centric web design, proficiency in Google Ads, and aiding clients in launching successful blogs.

Explore our interview with Eric, the owner of Single Grain, who acquired a social media marketing agency for just $2 and has grown it to make millions every year:

[su_youtube url="https://www.youtube.com/watch?v=fO1F21040pQ"]

Idea #11. Makeup Artist

• Average Annual Revenue: $47K+
• Average Profit Margins: 7.1%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 0.9%
• Best for: Creative and artistic entrepreneurs knowledgeable about fashion, style, and trends, people who are detail-oriented with strong communication and collaboration skills

If your friends often seek your expertise for makeup or Halloween costume advice, you might want to explore a freelance career as a makeup artist.

On average, makeup artists earn around $66,000 annually, though this figure can vary widely. Beginners in the field may start with as little as $30,000 a year, while seasoned makeup artists can command $120,000 or even more.

While a bachelor's degree isn't a prerequisite for launching a home-based makeup artistry business, specific types of makeup application may require a cosmetology or esthetician license. To establish your own venture, you might also need to be a Certified Makeup Artist. State regulations for this profession may vary, so it's important to familiarize yourself with the specific requirements in your area.

Idea #12. Painter

• Average Annual Revenue: $76K+
• Average Profit Margins: 7.2%
• Startup Costs: $1K-$100K
• Time To Revenue: 6-18 months
• Annual Market Growth Rate: -2%
• Best for: Home improvement pros, construction workers and contractors, people who enjoy physical work and have a sharp eye for detail

Launching a house painting business is a great business idea, particularly for those interested in a scalable niche. Joshua Douglas initiated his venture, A Painter’s Touch, with an initial investment of just $6,000. It has since flourished, with five crews generating over $25,000 in monthly revenue.

While Joshua's initial objective was to achieve a better work-life balance, he ended up surpassing his previous income levels. Discover more about his journey in this enlightening podcast interview:

Idea #13. Graphic Designer

• Average Annual Revenue: $123K+
• Average Profit Margins: 13.5%
• Startup Costs: $500-$5K
• Time To Revenue: 3+ months
• Annual Market Growth Rate: 2%
• Best for: Visual artists, designers, creative and artistic entrepreneurs

According to a recent Upwork report, graphic design emerged as the most sought-after creative skill in 2023. Graphic designers play a pivotal role in crafting business identities, a crucial factor in attracting clientele and bolstering sales. Given this significance, it's hardly surprising that this service is in high demand in today's market.

The average hourly wage for a graphic designer stands at $24. However, an experienced freelance graphic designer can command rates of $100 or more per hour for their expertise.

Idea #14. Lawn Care and Landscaping Business

• Average Annual Revenue: $272K+
• Average Profit Margins: 8.7%
• Startup Costs: $2K-$10K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 8.1%
• Best for: People who love green spaces and working outside, gardeners and plant experts, detail-oriented entrepreneurs who excel at customer service

Engaging in landscaping and lawn care services presents an excellent home business idea for individuals who have a passion for the outdoors. The United States has witnessed a consistent annual increase of 3.2% in the number of landscaping businesses over the past five years, and the demand for such services continues to surge.

Landscaping not only ranks among the top home business ideas but also offers the potential for significant scalability and profitability. Mike Andes, for example, propelled Augusta Lawn Care to over $1 million in revenue by the age of 24 and further expanded it into a franchise. Learn more about his service-based business journey in this YouTube interview.

[su_youtube url="https://www.youtube.com/watch?v=RLeOYgF54tE"]

Idea #15. Event Planner

• Average Annual Revenue: $94K+ (wedding planner-specific)
• Average Profit Margins: 12.2%
• Startup Costs: $500-$5K
• Time To Revenue: 3+ months
• Annual Market Growth Rate: 1%
• Best for: Organized and social entrepreneurs who are strong networkers and planners, creative problem-solvers

Projections indicate that the event-planning market is poised to exceed $1.5 trillion in value by 2028, marking an impressive growth rate of 11.2%.

Event planning encompasses a range of niches. While wedding planning and corporate events consistently yield high profits, there's potential for substantial revenue in organizing various types of events. This spans from social occasions like parties and reunions to professional gatherings such as product launches and conferences.

Establishing connections with local businesses, including event venues, caterers, and entertainment providers, is paramount for success as a self-employed event planner.

This aspect positions it as one of the most promising home business ideas, especially for individuals with backgrounds in hospitality, food service, and related industries. Drawing upon this expertise allows for rapid business growth.

Idea #16. Photography Business

• Average Annual Revenue: $50K
• Average Profit Margins: 7.3%
• Startup Costs: $1K-$10K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 0.3%
• Best for: Visual artists, photographers and videographers, creative entrepreneurs with strong customer service skills

Photography offers numerous avenues for income generation. You can capture events, create family or school portraits, or collaborate with businesses to provide images for their product listings and advertisements.

Idea #17. Proofreader Business

• Average Annual Revenue: $25K+
• Average Profit Margins: 9%
• Startup Costs: $100-$1K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 1.9%
• Best for: Grammar and writing experts, people with a sharp eye for detail

Another excellent home-based business concept in the realm of content creation is proofreading. Proofreaders provide written materials with a professional finish, meticulously identifying and rectifying errors in books, blog posts, marketing materials, and other types of written content.

Though proofreading generally commands lower compensation compared to writing, a seasoned proofreader can earn up to $25 per hour. Additionally, you have the opportunity to augment your income by offering additional services like fact-checking or content editing through your business.

Idea #18. Online Tutoring Business

• Average Annual Revenue: $389.5K+ (when an agency has multiple employees)
• Average Profit Margins: 13.10%
• Startup Costs: $100-$1K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 8.5%
• Best for: Educators, people who are compassionate, empathetic, and can explain complex concepts in straightforward terms

If you possess expertise in subjects such as math, English, or history, consider tutoring as one of the top home-based business ideas. It’s also one of the best online business ideas.

The emergence of online tutoring platforms like Skooli and TutorMe has simplified the process of connecting with students and instructing them directly from your home. Beyond your subject knowledge, all you require to begin is a dependable internet connection.

Your earnings as a tutor hinge on your level of experience and areas of proficiency. The standard rate averages around $24 per hour, and you have the potential to command higher fees if you're able to provide college-level tutoring or specialized services like standardized test preparation.

Idea #19. Real Estate Agent

• Average Annual Revenue: $298K+
• Average Profit Margins: 44.6%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: -0.3%
• Best for: Skilled negotiators, friendly people with strong sales and communication skills

Becoming a real estate agent is a great home business idea. Agents typically have the ability to dictate their own schedules and select the clients they want to work with, making a career in real estate one of the most suitable options for those considering home-based business ideas.

Real estate agents have the option to represent the buyer or the seller in property transactions. Some agents may alternate between these roles, while others may specialize in one.

Regardless of your focus, obtaining a license is a prerequisite for becoming a real estate agent. The specific licensing criteria vary from state to state, but the process is typically straightforward and swift. Additionally, a high school diploma or GED is the minimum educational requirement to qualify.

Idea #20. Voiceover Business

• Average Annual Revenue: $50K-$110K
• Average Profit Margins: 19.8%
• Startup Cost: $3K-$5K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 0.7%
• Best for: Strong readers and performers

If you've ever been complimented on your radio-ready voice, consider a voiceover business as a fantastic home-based business venture.

Voiceover artists are compensated for narrating scripts, audiobooks, or various written materials. Notably, you don't require acting prowess or formal training for this role—what's essential is the capacity to articulate and accurately deliver a written text aloud.

Platforms like Backstage and voices.com provide accessible avenues for honing your skills and establishing a clientele. This enables you to kickstart your journey in the field of voiceover artistry.

Idea #21. Property Manager

• Average Annual Revenue: $372K+
• Average Profit Margins: 10.1%
• Startup Costs: $100K-$3.5M
• Time To Revenue: 6-18 months
• Annual Market Growth Rate: 1.3%
• Best for: Home maintenance and repair experts, organized and system-focused entrepreneurs who are great communicators

Another home-based business idea is to venture into independent property management. Property managers are frequently contracted independently by individuals who own rental properties or commercial real estate.

Property managers handle the day-to-day responsibilities associated with a property, including rent collection, organizing or overseeing repairs, and addressing tenant inquiries and concerns.

One particularly lucrative niche involves overseeing Airbnb properties on behalf of their owners. For instance, Nicasa, an Airbnb business, not only manages properties for others but also handles its own real estate investments, generating an impressive annual revenue of $3 million.

To gain insight into their successful strategies, watch this video:

[su_youtube url="https://www.youtube.com/watch?v=6m-MosXlpOE&t=5s"]

Idea #22. Accounting and Bookkeeping

• Average Annual Revenue: $244K per employee
• Average Profit Margins: 18%
• Startup Cost: $500-$2.5K
• Time To Revenue: 3-12 months (plus accounting degree)
• Annual Market Growth Rate: 1%
• Best for: Certified accountants, entrepreneurs with strong math and financial skills

Accounting is an amazingly profitable home business idea, but you will need a degree. Breaking into the virtual bookkeeping space can be a challenge even with these credentials since you’ll be competing against large, well-known corporations that provide these services.

Even so, for someone who has accounting experience, this is a great small business idea that pays well.

Idea #23. Life Coach

• Average Annual Revenue: $63K+
• Average Profit Margins: 10.5%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 1.5%
• Best for: Excellent motivators, empathetic active listeners, people with strong time management, organization, and problem-solving skills

As a life coach, your role is to empower clients to reach their full potential. This encompasses aiding them in resolving challenges spanning various aspects of their lives, including personal relationships, physical and mental well-being, and broader life objectives.

Becoming a life coach doesn't necessitate specific licensing or formal education requirements. However, similar to other home-based business ventures, acquiring some training can instill confidence in your clients, particularly when you're just starting out.

For comprehensive information on the best life coaching programs, check out this Forbes review of top-notch life coaching certifications. Additionally, holding a bachelor's degree in fields like psychology, social work, or another social science can equip you with the skills needed to enhance your clients' lives.

Idea #24. eBay Reselling

• Average Annual Revenue: $60K-$120K
• Average Profit Margins: 5-15%
• Startup Cost: $100-$1K
• Time To Revenue: 30-90 days
• Annual Market Growth Rate: -9.3% (based on eBay annual reports)
• Best for: Thrifters and collectors

An eBay store is fast and inexpensive to open. Once it’s set up, all you’ll need to start an online store is the inventory you’ll sell.

When Mike Wilson opened Golden State Picker, he started by selling items he already had. Then, he used those profits to get more inventory from thrift stores, storage unit auctions, and online marketplaces.

He explains how he grew that into a $30,000-a-month business in the podcast below.

Idea #25. Career Coach

• Average Annual Revenue: $64K+
• Average Profit Margins: 2.8%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 0.8%
• Best for: Recruiting and human resources professionals, strong networkers with industry and job market expertise, effective writers, communicators, and motivators

Career coaches play a critical role in guiding individuals toward their dream jobs. Their responsibilities encompass tasks such as refining resumes and cover letters, conducting interview preparation and practice sessions, and assisting clients in developing the skills necessary for career progression.

Typically, a career coach charges between $100 to $150 per session. With a full roster of clients, this equated to an average annual income of $63,300 in 2023. Offering specialized services, such as executive coaching or aiding individuals through career transitions, can lead to even higher earnings.

Idea #26. Affiliate Marketing

• Average Annual Revenue: $60K-$160K
• Average Profit Margins: 8%
• Startup Cost: $500-$2K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 10.5%
• Best for: Bloggers, YouTubers, those with a large social media presence

Affiliate marketers advocate for products and services offered by other businesses and earn commissions for every sale generated by their promotional efforts.

This not only serves as an excellent supplementary income for blogs or YouTube channels but can also stand as a highly profitable independent venture. It's worth noting that you don't necessarily need to be a prominent social media influencer to thrive in affiliate marketing.

Matt Diggity, for instance, began as an SEO specialist and went on to build a seven-figure affiliate marketing enterprise. You can delve into Matt's journey and gain valuable insights in this podcast.

Idea #27. Print-on-Demand Business

• Average Annual Revenue: $60K-$120K
• Average Profit Margins: 5-15%
• Startup Costs: $100-$1K
• Time To Revenue: 30-90 days
• Annual Market Growth Rate: -9.3% (based on eBay annual reports)
• Best for: People with sales and marketing skills, collectors who can spot valuable items, those seeking flexibility and the potential for passive income

A print-on-demand (POD) business is responsible for designing products and marketing to their target market. When customers buy a product, the POD business owner pays for the cost of production and shipping, then the manufacturer will print the design and ship it directly to the customer.

This profitable business model can be used with t-shirts, mugs, and in conjunction with an existing eCommerce business or subscription box business.

How to Start a Home Business

When you have decided what business to start at home, you’ll need to understand the process to start your business. Steps to follow include:

• Decide on a home business idea
• Write a home-based business plan
• Name your home-based business
• Get an LLC for your at-home business
• Get business licenses for your home business
• Get a home business bank account
• Set up your home office
• Market your home-based business
• Serve your customers

You can learn more in our blog about how to start a small business at home.

Choose Your Own Business Idea

We’ve provided a list of online business ideas, work-from-home business ideas, and service business ideas to help you choose small business ideas you can do from home.

The rest is up to you. Once you’ve chosen your idea, you’re on your way to joining the ranks of successful home-based businesses. Which business idea do you want to start?