Real estate investment strategies
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by Diala Taneeb and Mashvisor
3) Fix and Flips
Fix-and-flips are for investors looking for active, short-term investments to quickly make money. Fix-and-flips are properties that are bought, renovated, and then sold. They are not a get-rich quick scheme but if done correctly, investors can quickly profit from this strategy.
When looking for a property to flip, it’s important to look for deal-breakers. After setting a budget, it’s crucial to consult an inspector, contractor, and appraiser in order to identify issues and avoid losing time and money. When flipping, time is the biggest asset. The longer it takes to flip the property, the more monthly expenses.
The commercial market is huge, and joining commercial real estate investing can lead to good returns. These properties are leased to businesses which can range from tiny little shops to guesthouses. While there’s an opportunity to rent out to big businesses and get significant cash flow, vacancies can last a longer than with residential properties. This strategy is not for beginners but it’s a great level to reach in your real estate portfolio. Read more in the next point about how you can do this.
5) Passive Investments
Passively investing in real estate means not getting your hands dirty and giving your money to someone else to make the investment happen. One way to do this is by working with a Real Estate Investment Trust ( REIT), which is when a group of investors pool their money to buy large real estate investments, such as malls, skyscrapers, or many single-family homes. Each investor gets a share of the profits and does very little work. These passive investments generally have higher returns and less risk. Different types of REITs include retail, residential, healthcare, office, and mortgage REITs. An investor can invest in a stock exchange-listed REIT or buy a share in a REIT mutual fund. It’s best to consult a financial expert to see if this real estate investment strategy would for you.
Another way to passively invest in real estate is lending your money to an investor looking for a property to flip. Why wouldn’t an investor just go to a bank? It’s difficult to get a loan for a property that is vacant and needs work. This loan is called a first trust deed investment. The investors should pay the 20% down payment and closing costs. As a lender, you would receive interest payments on the loan and a final payment at the end of the term. You money is secured by the property.
6) Real Estate Wholesaling
Making money in real estate does not always require spending money, there are so many diverse opportunities to invest. Wholesaling is one of the ways you can create an income without having to spend any money at at all. A wholesaler finds a seller who wants to put their property up for sale and has not yet gone on the market. The wholesaler finds a buyer and then is entitled to a share of the selling price. To be successful with the real estate investment strategy, you have to network and make contacts in order to have a database of potential sellers and buyers.
Real Estate Tips
Before deciding on any real estate investment strategies, make sure to thoroughly understand what each strategy entails. Do an investment property analysis before investing in a rental property or commercial property. Using analytics can help you find the best investment properties and neighbourhoods.
2) Network and Join Real Estate Investment Clubs
Join real estate investment clubs to learn about investment strategies and to find partners to work with. Having different team members or contacts with different specialities is very beneficial. Besides getting investment tips, you can call on them when in need of a help.
3) Location, Not Convenience
It can’t be said enough – location is key in real estate. Try to explore areas that will give the highest returns and avoid staying in your area just for the sake of convenience. When you have a location, you can focus on a niche market and better appeal to tenants. For example, if you decide to invest in a college town, you can focus on providing housing suitable for students.
Real estate investing offers a lot more opportunities than most investments. Once you’ve done enough research about different real estate investment strategies, you can have a better idea of what you want and become the investor you want to be.