To make money in real estate, beginner or more advanced investors must assess, analyze, and research the best real estate investment strategy aligned with their long-term business vision and goals. Yes, you heard correctly. Real estate investing becomes a business with many benefits and rewards; the trick is to treat it as such in order to experience strong return on investment and long-term financial rewards. There is no one best real estate investment strategy, there are plenty. And depending on your financial resources, current capital, credit score, and real estate knowledge, you must choose the right one for you. Do not think buying a rental property is a walk in the park, don’t expect money to fall into your lap. To succeed and make money in real estate, you must have the drive and the persistence to keep your business growing in the long term.
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The Best Investment Strategies to Make Money in Real Estate
1. Buy and Hold Real Estate
If you like a conventional path, then consider the buy and hold strategy to make money in real estate. The name says it all; buy a rental property and hold it for as long as possible for a bigger profit. Whether you opt for a single family home, or a multi-family home, or even a condo, it is up to you. If you are a beginner real estate investor, seek professional advice from a real estate agent to help you hone down on the best rental property for your business in the right location, at the right price. Do not forget your responsibility, as a landlord, towards your rental property as well as your tenants. It is very important that you treat them as stakeholders to your business, meaning they all contribute to growing the business. Your rental income comes from your tenants, and essentially they end up paying off your mortgage payments. A happy tenant pays the bills, a bad one burns a deep hole in your pocket. So, make sure you choose your tenants wisely, just as you would choose the location for your real estate investing.
2. Airbnb Short-Term Rentals
To deviate away from conventional real estate investing, consider the prospect of owning an Airbnb short-term rental property. Unlike the buy and hold strategy, owning an Airbnb rental property is much more dynamic and fast paced; you have a high tenant turnover, seasonality is a big thing, your occupancy rates fluctuate respective to seasonality, guests are very demanding and never shy away from writing a bad Airbnb review, if deemed necessary in their eyes. Airbnb hosts or real estate investors must keep up with the fierce competition to keep their rental property in the high ranks and attract positive Airbnb reviews of guests. The investor’s capability to make money in real estate is contingent on online reviews and location. If you buy a rental property in a prime location, this becomes your competitive advantage in attracting high demand throughout the year, irrespective of the seasonality. The attractiveness of your Airbnb rental property is also a deal breaker.
3. Commercial Real Estate
Commercial real estate requires more capital than your traditional real estate investing, but it yields stronger returns. Nevertheless, it is one of the best investment strategies to make money in real estate. Commercial real estate refers to investing in buildings intended for businesses. Unlike the buy and hold real estate investment strategy, real estate investors can make much more money in commercial real estate because you essentially collect rental income from more than one business unit. Businesses generate more money than tenants, so the rental income for commercial real estate can be higher. Also, more expenses tend to be covered by businesses as opposed to residential tenants, resulting in higher cash flow.
Related: Here Is How to Maximize Cash Flow from Your Investment Property
4. Positive Cash Flow Properties
If you are in real estate investing for some time now, you must have come across positive cash flow properties. Simply stated, positive cash flow properties in real estate yield positive returns on investment, or better yet yield a positive net profit. Investing in positive cash flow properties is essentially a buy and hold strategy, but you are buying a rental property specifically for the positive cash flow returns. Mashvisor allows real estate investors to access and find positive cash flow properties anywhere in the country in an instant. In this way, investors won’t have to worry about brushing up on their math skills to calculate positive return on investment. To make money in real estate, a positive cash flow property is a prerequisite.
5. Negative Gearing
Negative gearing is a little counterintuitive in real estate investment, but nevertheless it is one of the best investment strategies to make money in real estate. Essentially, it is a spin off from the buy and hold strategy, the only difference is (as the name says it), you accumulate negative cash flow returns initially for paying off your expenses, but the property goes up in value so that when it comes to selling down the line, you make a killer profit on the house. In negative gearing, you lose money for a certain period of time, but the rental property will grow faster than the money you’re putting into it.
Related: What Are the Reasons for Stagnant Rental Income?
As a real estate investor, to buy rental property and/or invest in real estate is a lucrative and a financially rewarding business. It is a great decision to say the least, but make sure you are prepared to take on this venture. There is no such thing as a ‘risk-free’ investment; if you don’t do the right due diligence, you will not make money in real estate. This industry is very cut throat and full of competitive real estate investors looking for the next business opportunity. The best real estate investment strategies will yield you the strongest return on investment and have you laughing all the way to the bank.
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