Defining a Niche & Strategy
From when you were a young-ling, you always found yourself wanting to fit into a specific group. This is just the case with real estate investing to find the most profitable investments. There are a number of different real estate investing strategies that real estate investors like yourself can choose from. This year, there are specific strategies that have been known to bring that cash flow and allow that rental income to skyrocket.
What niche you decide to specialize in goes back to you and your skills. You have specific real estate investing tools that differentiate you from the rest. One of those special comparative analysis tools is Mashvisor. With Mashvisor, we are able to give you a number of different analytics about your investment property. You can even use the investment property calculator to get all the numbers you can imagine. With your special skill set and Mashvisor’s technology, you are bound for success.
Here, we give you the top investment strategies & niches in real estate, allowing you to find the most profitable investments in 2018.
The Top 4 Strategies for Real Estate Investing
Whether you’re a beginner in real estate investing or a savvy experienced real estate investor, you have one thing in common: you’re on the money making trail, and you’re taking the real estate direction. Either way, you need to figure out what real estate investing strategies you’re going to use. Without further ado, here are the best real estate investment strategies this year:
Related: Top Six Real Estate Investment Strategies
Fix and Flip
Find a rental property that needs some extra elbow grease, buy it at a depressed price, fix it up, and resell it as soon as you can (typically within 3-6 months) for a profit. Fix and flip properties are a great way to make a good return on investment. It is important to understand the potential costs. With that, determine whether or not you are financially stable to take this real estate investing route. The most profitable investments don’t have to be shiny and brand new. Remember, not all that glitters is gold.
Wholesaling
With property wholesaling, you’re going to be concentrating on finding real estate deals for low prices. You then aim to quickly sell the investment properties to landlords or other “flippers” for a small markup price. Don’t be fooled by the “small markup price,” large profits are more than possible. The most profitable investments are within arms reach, so reach for them. If you decide to become a property wholesaler, you won’t be disappointed.
Buy and Hold Rentals
What is a buy and hold strategy? Buy and hold consists of owning real estate with the intention of renting it to generate income. Pretty self-explanatory, right? You purchase an investment property with the aim of transforming it into a rental property. You can introduce rental income to your pocket in due time.
The benefits of buying rental properties using this strategy include rental income, tax shelter from expenses, amortization of loans, and price appreciation. Can’t forget about the benefit of being able to use Mashvisor analytics! Finding the most profitable investments has never been so easy.
Private Note Investing
With this strategy, you get to play bank. In the real estate business world, private investors are also known as hard money lenders. You will find other real estate investors from all investment strategies on the search for a loan from a hard money investor. Hard money lenders for rental properties, fix and flips, buy and hold, and more, are always in demand.
This is an interesting one because you don’t make money off of the actual rental property, but off the property owners that borrow from you. You do still want to make sure you’re financing one of the most profitable investments. If there is money in the pocket of the investor you’re lending to, there is money in yours as well.
You receive interest in exchange for extending credit to your borrower. This one comes with a little extra risk, so be aware of the restriction and laws before diving in.
The Winner
We are tempted to give out one gold medal to the best investment strategy, but it just doesn’t work that way in real estate. There are a million different shoes that could fit you, but you need to pick the style you like the most. You can also change up that style every now and then if you want to experiment. It works just the same with these investment strategies.
You can find the most profitable investments and use different plans to go about it. Depending on your preference and skill set, some will work while others won’t. Think of the cash flow, the long-term gains, the costs, and benefits. Look at the Mashvisor numbers, as these are all good indicators of what strategy is right for you.
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We can say that of the strategies we named, rental properties can be considered the most profitable option. A rental buy and hold property strikes a balance between the short-term & long-term gains, along with the risks that come with the purchase. An attractive rental property with potential to grow in value over the years can be considered one of the most profitable investments.
Top Niches in Real Estate
There are a number of different real estate niches, with new ones arising every day. We are going to concentrate on two categories of real estate niches, and subcategories we consider the most profitable investments.
First in Line: Property Niches
The most obvious way to specialize in real estate investing is by property type. This is just a simplified explanation, so if you see a property type that interests you, do some in-depth research! With good research comes the most profitable investments.
Related: 5 Tips on Researching Investment Properties
1. Single Family Homes
These investment properties exist on their own lot, and builders construct them on site. Single-family houses are so plentiful and popular (they make up 60% of the U.S. housing market), making them one of the best real estate investing niches.
Specific high-priced markets, however, may not work financially for house rentals. For the most profitable investments, look in working-class neighborhoods, or less trendy neighborhoods just outside of the popular areas. The prices are usually more affordable there.
2. Duplexes/Triplexes/Quads
Duplexes (2 units), triplexes (3 units), and quads (4 units) are the hybrids of real estate. They too occupy their own residential lot but have more in common with apartments buildings. This is due to their ability to produce higher rental incomes with lower relative expenses. You can also benefit from favorable financing. Conventional lenders usually only offer low, fixed interest rates for 30 years on properties with 4 units or less.
3. Small Apartment Buildings
Definitions differ for this niche, but it’s typically between 5 to 100 units. These buildings are usually too small for the big national apartment investors to mess with. But they are too big for the small, “just starting out real estate” investors. All that’s left are the investors willing to pursue them. You could potentially be one of them, especially if you’re after the most profitable investments. Financing for these typically comes from commercial lenders, like local banks.
Runner-up: End-user Niches
End-users are the customers who really drive the real estate investing business. They are known to be the tenants and buyers who live in investment properties. It is only sensible to specialize in a niche that serves certain groups of customers, which in this case are your end-users.
These niches are about buying investment properties in locations that will appeal to certain end-users. You are working to get a customer base, and learn them right side up and upside down. That way, you’ll be acing the game you’re in, reaching that expert level.
1. Long-term Rentals
Why is this considered one of the most profitable investments? Long term rentals are all about purchasing income properties that attract quality tenants that stay for years (hence the “long-term” part). With this type of niche, you can build a kingdom of long-term rentals, minimize your expenses, save yourself a lot of trouble, and build that rental income in the long run.
You will see that there is not one specific property description that fits into this category. It is one of the most diverse niches, as it depends on your location and the demand of tenants. Study the U.S. real estate market and use market analysis tools. You’ll be surprised what opportunities you can discover.
2. Short-Term Rentals: Airbnb
It’s no secret that short-term rentals are on the rise and popularizing every day. Thanks to websites like Airbnb, listing your short-term rentals for exposure is easy. This is especially convenient for tenants that are visiting the area you are in. Most of the time, these travelers want to avoid hotel costs and long-term rentals. Instead, they look to your short-term properties to get a sense that they never left home. The goal of Airbnb hosts is to make Airbnb guests feel they are locals, not visitors.
Related: Buying a Short-term Rental Property? Invest in the Most Airbnb Friendly Cities
This is just as diverse as the long-term rentals because you can rent anything from a basement to a whole apartment. Short-term rentals also get fun to own as your level or creativity skyrockets. These rental properties have the potential to achieve higher rental rates than long-term rentals. It is no wonder they are considered one of the most profitable investments. However, a lot more work & turnover is to be put into them in order to achieve that.
3. Vacation Rentals
With a vacation rental property, you are concentrating on the tourist aspects of the area. Beaches, mountains, and other attractions are key to owning a prosperous vacation home. In order to make the most profitable investment out of your rental vacation home, you need to be aware of the location. When buying a vacation home, you want to choose a site that has romance. By romance, we mean things that will bring warmth to your investment property while still attracting tenants.
This niche has some crossover with Airbnb, but it mainly focuses on vacation areas. VRBO.com, known as vacation rental by owner, is a popular site used for this platform. Research, research, research! Make sure you’re getting your money’s worth if you decide to go with this niche.
Determine Where You Belong to Find the Most Profitable Investments
Ask yourself three questions. What interests and intrigues you in real estate? With the skills you currently have, while knowing your strengths and weaknesses, is this niche suitable for you? With the goals you have set in your mind, does this niche & strategy allow you to reach it? You need to clear the air before you hop into the world of real estate investing. There is plenty of money to be made out there. Devise the right investment strategy and find your desired niche. This way, the money that is out there will instead be in there. In your pocket, of course.
