There are several real estate investment strategies that an investor could use to achieve financial success. One way you can make money with real estate is through short term investment strategies. With short term real estate investment strategies, you can make money quickly.
Short term real estate investing is typically more popular in areas where property value is stable or has insignificant projected increases. If a real estate market has a high appreciation rate, long term investments would be more profitable.
The goal of using these real estate strategies is to make the most profit in the shortest time possible. Of course, not everyone wants to be involved in property management or deal with tenant issues. For such people, investing in real estate using short term real estate investment strategies would be a good idea. Nevertheless, they come with a lot of risks as well. So before we look at the best short term investment strategies for 2020, let’s first go through some of their benefits and drawbacks.
Pros of Short Term Investment Strategies
- If done right, you can make quick profits, even in just a couple of weeks.
- Short term investment strategies tend to have a higher return on investment.
- The holding period of the property for short term investment strategies is usually short or even non-existent. With no long-term commitments, it’s easier for beginner real estate investors to explore the industry.
- You don’t have to worry about managing the investment property or handling tenants.
- It’s possible to invest with little or no money at all.
Cons of Short Term Investment Strategies
- Passive real estate investing is not possible with short term real estate investment strategies. You need to work hard consistently to make money.
- Real estate investors will not be able to take advantage of natural property appreciation.
- You have limited time to complete the real estate deal if you want maximum profit. Sometimes it may take too long to find a property buyer. You must have a good marketing plan.
If you are a real estate investor looking to make profits within a short period of time, here are 2 of the best options for 2020.
Short Term Investment Strategies 2020
1. Real Estate Wholesaling
Real estate wholesaling is a strategy where you find a property, negotiate a good price, put it under contract without paying for it, and transfer the contract to another investor at a fee. Wholesaling real estate enables you to make quick money without a lot of work or a real estate license.
The idea behind real estate wholesaling is to make a profit without having to buy the investment property yourself. This means that you don’t own the property at any point in time. Your job is to seek out distressed properties for sale below market value or negotiate a deal with the property owner and put it under contract with a contingency. You then market it to find interested real estate investors who can buy the investment property and assign them the contract. The wholesaling fee that you charge is your profit.
Real estate wholesaling is one of the best short term investments because one doesn’t need money to do it. This makes it suitable for investors with a limited budget. You just need money to market the investment property to potential buyers. If done properly, it is possible to make a sizable profit without risking your own money. You also get to grow your connections.
The risk with this strategy is that sometimes you may fail to find buyers in time. In such instances, backing out of a contract can lead to penalties and give you a bad reputation among local property investors. You also need to be a good negotiator to find good deals.
2. Fix and Flip
The second on our list of good short term investment strategies for 2020 is house flipping. The fix and flip real estate investment strategy involves taking a distressed property and renovating it to improve its value and then selling it to another real estate investor or homebuyer at a higher price than what you bought it for.
Even though house flipping is not an easy job, it has the potential of generating serious profits if done properly. This strategy usually has a higher return on investment than real estate wholesaling. However, depending on the condition of the investment property, the costs can have a huge variance. If you have the right expertise, finances, and time to handle fix and flip projects, you can make a significant amount of money very quickly. Experience in negotiating deals and rehabbing property will be a huge plus.
Your plan should be to rehab and sell the property as quickly as possible so that you make a profit within a short time frame and move on to the next project. Renovations can be as simple as repainting the walls, changing the carpet, or doing other cosmetic renovations or they can go as far as changing the layout of the house by moving walls and adding an extension. If you are looking for quick cash, it is definitely one of the best short term investment strategies 2020.
Tips for Fix and Flips
- Find investment properties under market value
- Do a home inspection to estimate the renovation cost
- Use real estate comps to estimate the after repair value
- Build a strong network of professionals to help you with the different aspects of your house flipping business such as real estate agents, appraisers, inspectors, contractors, financiers, etc.
How to Find Properties to Achieve Your Short Term Goals
If done properly, investing in real estate for short term goals can be very lucrative. The secret is to understand the numbers before making an investment. Do not gamble. Luckily, Mashvisor can help real estate investors to find the best short term real estate investments that are below market value in any area in the US housing market.
You can visit the Mashvisor Property Marketplace to search for off-market properties like bank-owned properties, foreclosed properties, and short sales. With the use of helpful property filters, you can narrow down your search based on your criteria. These distressed properties are likely to be listed below market value and are suitable for investing for short term goals.
To start your 7-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
The Bottom Line
Short term investment strategies are great if you want to make money in real estate quickly. However, they may not be suitable for novice real estate investors with little experience since there is a high risk of losing money. It’s important that you have a good understanding of the nature of each strategy and the related risks before you consider any of them.
The right real estate investment strategy for you will depend on your investment goals, your real estate investing experience, the amount of money you have for investing, and the amount of work you are willing to put in.