When you’re a newbie in real estate investing, the initial thing you try to do is gathering as much knowledge and information pertaining it. However, real estate as an industry is quite vast. You cannot master all that there is to know. Even so, there are a lot of opportunities in the sector, and it makes more sense narrowing down to the best real estate investing strategy. This article will consider some of the popular investment vehicles and viable real estate investing strategies that work. You can get to choose one that works for you with basis on your preferences, budget and investment goals.
Fix & Flips
If you’re an investor who prefers short-term investments to make a quick buck, then this real estate investing strategy is for you. Get this right; this is not a get rich quick scheme. In a simple sense, investors buy property, renovate them and later sell them at a profit. When done with utmost precision, this strategy can generate quick profit to investors.
But first things first. You ought to carry out due diligence and identify various deal breakers when considering which property to flip. Have a budget in place. Also, remember that it’s important to seek the input of various experts in order to identify issues and also to save yourself time and effort. Important experts that you should consider are:
- Property inspectors
Another important thing to be considered is the aspect of time. When flipping property, time is of the essence. The longer you take to flip a property, the higher your overhead, and expenses. Thus, it pays to flip as fast as you can.
Buy and Hold Strategy
This is for those investors who are looking for long term real estate investing strategies. It provides a long term horizon to investments while at the same time promising an opportunity for steady incomes. Another upside to this strategy is that the investments stand to benefit from appreciation.
The buy and hold real estate investing strategies require investors to do an initial market research. It requires the investors have background information on the neighborhood and the property expenses. Some important aspects to consider when acquiring property on a buy and hold basis include:
- Whether you can manage the property yourself or you can use a property management company
- Whether you are able to handle tenants
Real Estate Investing Strategies – Lease Options
This is one of the most under-estimated strategies. If you’re starting out in real estate, this is a viable strategy. With lease options, you get to lease out your property to tenants. The tenant, in this case, has the right to buy the property at the end of the lease period.
The upside to this strategy is that one gets to sell their property even when they don’t have enough equity against it. Buyers also stand to benefit because they don’t have to put a down payment on the property.
Some investors don’t like to get their hands dirty. They like to stay in the shadows while still making some money. If you are this type, then you are better off with passive real estate investing strategies.
Some trusts are formed for the sole purpose of investing in real estate. They are called Real Estate Investing Trusts (REIT). With such, investors pool money to buy large real estate investments. Each investor gets a share of the profits with minimal effort.
The upside with passive investments is that they have minimal risks and greater returns. Before you embark on such an investment, consult with a financial advisor to gauge whether it’s the right investment for you.
In conclusion, the above discussed real estate strategies are viable and are best placed to give you a good return on your investment. Apply any that’s consistent with your investment preferences.