Buying Investment Property Guide to Choosing the Best Way to Invest in Real Estate by Eman Hamed August 12, 2018December 16, 2021 by Eman Hamed August 12, 2018December 16, 2021 Beginner real estate investors always ask “What is the best way to invest in real estate to make money?” As you already know, the world of real estate investing presents a wide range of opportunities, giving anyone the ability to invest in the way they think is best. Seeing that different property investors have different goals, there are many possible answers to the above question. What you might believe to be the best way to invest in real estate could be something that another real estate investor would never consider. Thus, the question that you should be asking is “How do I determine which is the best way for ME?” Below, we explore 4 different investment strategies for making money in real estate investing and explain when you can consider each one as the best way to invest in real estate. Without further ado, let’s jump right in! #1 Invest in Traditional Rental Properties The most common way to become a real estate investor is through buying a rental property. The traditional way of investing in rental properties is to rent them out to tenants for the long-term. Many perks are associated with this investment strategy, most importantly cash flow and appreciation. Basically, when you rent out an investment property, you’ll receive monthly rental income which you can use to cover your expenses. Whatever you have left goes straight into your pocket! Additionally, since you’re renting out to long-term tenants, chances are you’ll hold the rental property for an extended period of time. In the real estate investing business, this leads to appreciation which allows property investors to sell their investments for a higher price, making an attractive profit in the future. If you’re interested in learning more, read this: How to Succeed with Traditional Rental Properties When is this the Best Way to Invest in Real Estate? If you’re investing in a real estate market with a high demand for traditional rentals. For example, areas with a strong economy, growing job market, and where the population is increasing make the best places to buy a long-term rental property. When you’re planning on buying single-family or multi-family homes. These types of investment properties are what tenants look for when thinking of renting a house for the long-term. If your budget allows you to buy such investment properties, seeing as not every beginner real estate investor has enough capital to make the purchase or take out a mortgage loan. When you’re willing to hold the investment property long enough (at least 10 years) in order for appreciation to take effect. Do you think a rental property is the best way to invest in real estate for you? Use Mashvisor to start searching for your first rental! With our property finder tool, just enter the city of your choice along with your budget and rental strategy (traditional) to find the best properties with the highest profitability. Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes! #2 Invest in Airbnb Rental Properties Airbnb is a website that allows anyone to list his/her property (or even just a unit) to rent out for a short time period, usually from one night to 6 months. What makes this the best way to invest in real estate is that you don’t need to go through the process of buying an investment property specifically to rent out on Airbnb. You can list your own residential property or just a room and make passive income – depending on your location, of course. Airbnb rentals are increasing in popularity among real estate investors as they could definitely bring in a good return on investment! When is this the Best Way to Invest in Real Estate? Again, depending on your location. You need to find a real estate market where the demand for short-term rentals is high. In general, such locations are tourists’ destinations seeing as tourists and travelers are the target tenants of this investment strategy. Where Airbnb is legal. You might not be aware of this, but numerous city councils across the United States are in a war against Airbnb and force strict regulations on Airbnb property investors. If you can guarantee high Airbnb occupancy rates. This will determine your rental income and how much you can charge your tenants, which will ultimately affect your return on investment. Related: How Can You Sustain High Airbnb Occupancy Rate for the Most Profitable Rental Property? Our investment property calculator will help you find where to invest in Airbnb for high occupancy rates. This real estate investing tool projects estimations of readily calculated data regarding investment properties across the US housing market. This data includes the cash on cash return, cap rate, and rental income of an investment property if it were to be rented out traditionally vs on Airbnb. Not only that, but you’ll also get data regarding the Airbnb occupancy rate of investment properties in the location of your choice. Thus, with Mashvisor’s investment property calculator, you can determine which rental strategy is the best way to invest in real estate AND get the needed data to analyze investment properties to find the most profitable one! To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here. #3 Invest in Fix-and-Flips Another great investment strategy to make money in real estate investing is through fix-and-flips. These are cheap properties that require a lot of reparations. A real estate investor basically buys such properties, renovates them, and puts them back on the market for sale. This is the best way to invest in real estate for making fast money. However, fix-and-flips carry some risks and they’re not passive income investment strategies – once the investment property is sold, it stops making money. When is this the Best Way to Invest in Real Estate? Since these are risky investments, only a real estate investor with sufficient knowledge and experience in the business is recommended to invest in fix-and-flips. Although these are cheap investment properties, the costs of renovations could be pretty hefty. Thus, only invest in them when your budget allows you to and when you know exactly how much the investment property will be worth afterward. When you have a good network including a real estate agent who knows where to find cheap properties, an appraiser to estimate the value of the property, and a team of experts to conduct the repairs in a timely and cost-efficient manner. #4 Invest in REITs Real estate investment trusts are companies that pool money from investors to buy and finance large investment properties. The trust will handle managing these properties and, in return for their money, investors receive passive income in the form of dividends. REITs are the best way to invest in real estate if you don’t want to directly own a property. This investment strategy spares you the responsibilities that come with owning a rental property like dealing with tenants, collecting rent, handling repairs and maintenance, etc. When is this the Best Way to Invest in Real Estate? If you don’t have the capital to buy and own investment properties. When you’re new to real estate investing and want to learn more about the business. If you have a full-time job and no time to focus on managing a rental property. If you’re considering real estate to make passive income for retirement. To learn more about this investment strategy, read this: What Is REIT and Is It a Good Idea to Invest in One? The Bottom Line The world of real estate investing has an endless amount of opportunities to choose from. What might not work for one real estate investor might be the perfect option for you! It all depends on your personal, investment, and financial goals. Thus, make sure you understand the real estate market you’re investing in, your financial standing, and your budget to determine the best way to invest in real estate. If you were to invest in real estate, which strategy would you choose? Let us know in the comments – we’d love to know! If you’re planning on buying rental properties, make sure you use our investment property calculator to analyze different properties across the US housing market, in addition to our property finder tool to find the best-performing properties in the city of your choice. Sign up with Mashvisor to start your search or click here to start out your 14-day free trial! To learn more about how we will help you make faster and smarter real estate investment decisions, click here. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL 0 FacebookTwitterGoogle +PinterestLinkedin Eman Hamed Eman is a Content Writer at Mashvisor. With a focus on market reports, she enjoys researching the state of the real estate market in different cities across the US. Eman also writes about trends, forecasts, and tips for beginner investors to gain the confidence and knowledge they need to make wise decisions. Previous Post Phoenix Real Estate Market 2018: A Good Place to Invest? Next Post Pros and Cons of 5 Different Types of Residential Properties Related Posts How to Buy a Townhouse Investment in 7 Steps Learn Here How to Buy a Foreclosed Home as the Best Real Estate Investment Property Why Real Estate Investing Is the Best Way to Make Money Every Real Estate Investor Needs These Real Estate Analytics Tools What You Need to Consider Before Buying Investment Property 7 Things to Consider When Buying a Rental Property Airbnb Phoenix Investment Property: A Good Choice for 2018? Rental Property Calculator: Why Every Real Estate Investor Needs One How to Avoid Buying Negative Cash Flow Investment Properties How to Find Rental Property That Will Actually Make You Money Should I Buy a Rental Property in a Bad Neighborhood If It’s Really Cheap? 5 Ways to Find Multifamily for Sale to Invest In Leave a Comment Cancel Reply Save my name, email, and website in this browser for the next time I comment.