Top Real Estate Investment Strategies
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Investing in real estate is one of the best ways to make money, partially because of the many options it gives to both part-time and full-time investors. However, due to the many different opportunities, you have to make sure that you choose the right strategy to fit your budget, skills, personality, needs, and goals. To help you choose the right path for you, we will have a look at the top real estate investment strategies as well as their pros and cons which is on the Equities.
1. Investing in Rental Properties
The first way to invest in real estate is also the most popular one – buying an investment property to rent out to others. You can go for a traditional, long-term rental or for a vacation, short-term rental. The most important advantage of this investment strategy is that you can start making money right away – as soon as you buy a property, get it in a rentable shape, and find tenants. As long as you repair your property on time and are able to keep good tenants, you will have a reliable source of monthly income. Another major benefit of this strategy is that it allows you to grow quickly as an investor. You can use the rental income from your first property to buy another one, and so on and so forth. Within a few years, you can own an entire portfolio of real estate rental properties.
The key to success with rental properties is buying a profitable property in a top real estate market. To achieve this goal, you have to conduct both real estate market analysis and investment property analysis to know exactly how much rental income you will make (depending on your rental strategy) and how much your return will be. Remember to always go for positive cash flow properties from day one. Unless you have a positive cash flow rental, you will be losing money instead of making money, and no real estate investor wants that.
2. Buy and Hold
The second real estate investment strategy is to buy and hold. The idea is simple: you buy an investment property and sell it later on after its value has significantly appreciated. The obvious proof of this strategy is that you have the potential to make a lot of money in the long term. Moreover, this return on investment will be largely passive as you don’t have to do anything to get natural real estate appreciation to work for you. If you want to have an even larger profit, you can force appreciation on your property by improving the inside and the outside. Just make sure to focus on relatively cheap improvements which bring a big increase in value.
3. Real Estate Wholesaling
If you are not sure you want to engage in real estate investments in the long run, you can try out wholesaling. Another benefit, in addition to the short timeframe, of this strategy is that you need only minimum capital as you are not actually buying a property. All you have to do is to get a house for sale under contract from the seller, market the property to potential buyers, and eventually assign the contract to a buyer.
4. Fix and Flip
Another short-term real estate investment strategy is fix and flip. Unlike wholesaling, with flipping houses you have to buy a property before you renovate it and sell it to the final investor or homebuyer. The good news is that fix and flip investors have access to more financing options than rental property investors as they need the money for only a short period of time and can afford paying a higher interest rate. Another difference between wholesaling and flipping is that in the latter case you don’t work on a fixed schedule. Nevertheless, it is in your best interest to fix and flip the property as quickly as possible to make profit and start another real estate investment project.
The most passive form of real estate investment is investing your money in a REIT, or a real estate investment trust. With this strategy, all you have to worry about is choosing the best REITs and knowing when the right time to sell your shares has come. The potential for return is significant, and you can make money in both the short and the long term.
Whether you are considering joining the real estate investment business on part-time or full-time basis in 2019, it is guaranteed to have the right strategy for you. If you don’t mind some hard work for a couple of weeks which will bring you quick cash, you can try out wholesaling or flipping. If, on the other hand, you would rather go for passive income in the short and long term, buy and hold rental properties are the best choice for you.