What are the best real estate investment strategies?
In our opinion, it isn’t possible to give one answer to this question as the best real estate investment strategies depend on what you intend to get out of your investment as well as other factors.
Some of the different factors that you should consider when asking yourself what the best real estate investment strategies are include:
- How soon do I want to profit from my investment?
- Do I want to make money passively or actively?
- What are my options for investing in real estate with little money?
- What real estate investments have the highest potential for return?
These are the main questions that can help you determine the best real estate investment strategies based on your criteria and investment goals.
Real Estate Investment Strategies for Quick Profits
When considering the best real estate investment strategies, you must ask yourself how soon you want to cash in on your investment.
Real estate is generally considered as long-term investment because some of the highest value investments in real estate will peak in the long term when the investment property has appreciated in value. Some investment properties can grow drastically in value due to appreciation, and over extended periods of time, some investment properties have historically shown growth rates of 1,000+%.
When it comes to investing in real estate for the long run and relying on appreciation to increase the value of your investment, the best real estate investment strategies will include holding ownership over the investment property for a long time, which is also known as a buy-and-hold strategy.
However, some real estate investors prefer to cash in on their investment as soon as possible. This is where some of the best and most creative real estate investment strategies come into play.
A fix-and-flip real estate investing strategy is one of the quickest ways of making money in real estate. The strategy does not require a long time to generate a profit because it relies on purchasing a property, renovating or fixing it, and then selling it at a higher value as soon as possible.
Wholesaling is another real estate investing strategy that can generate quick profits. Although real estate wholesaling does not generate high amounts of profits, it is a very good and quick way to make a few thousands or tens of thousands of dollars in a very short period of time which can be as little as a few days.
Real Estate Investment Strategies for Passive Income
Another way to categorize real estate investment strategies is to look at how passive or active the income is, or, in other words, how active you have to be in order for your investment property to generate income.
The best real estate investment strategies for making a passive income are, naturally, rental investment strategies. While rental properties do in fact require the real estate investor to be active and manage the investment property in order to be profitable, hiring professional property management can turn any active rental property into a passive investment as the professional property management company will be handling all aspects related to managing and running the rental property.
Rental strategies revolve around purchasing an investment property for the sole purpose of renting it out either traditionally or on Airbnb and making profits through the investment property’s rental income.
There are two main types of rental strategies – short-term and long-term rental properties.
Short-term rental properties are investment properties that you can rent out through Airbnb or any other short-term rental platform or company (such as VRBO and HomeAway). A typical short-term rental property can be rented out to tenants for short periods of time that can range from a single night to a few weeks.
Long-term rental properties, also known as traditional rental properties, on the other hand, are investment properties that are rented out to long-term tenants for durations that can range from several months to several years.
Another real estate investment strategy that is very popular and that can generate a passive income is investing in REITs. Real estate investors who invest their money in a REIT (Real Estate Investment Trust) will start generating a passive income in the form of dividends from the REIT without having to actively manage any aspect of their investment.
Real Estate Investment Strategies with No Money Down
Some real estate investment strategies do not even require the real estate investor to put any money down on the investment. These investment strategies are typically very creative, and they are perfect for real estate investors who do not have sufficient available money to invest in real estate.
Wholesaling, which was mentioned above, is a very good real estate investment strategy for investing with no money down.
In wholesaling, instead of purchasing a property, a real estate investor can sign a contract with a homeowner to purchase his/her property, but the contract has to be designed in a way that allows the real estate investor to assign the contract to another property buyer. This means that a real estate investor who does wholesale will not actually need any money to purchase the property because he/she won’t actually be purchasing the property. A real estate wholesaler will negotiate a deal with the owner of a distressed home to purchase the property at a low price and would then find an interested buyer and assign the contract to him/her at a slightly higher price. This difference in price is the profit that the wholesaler will be making.
Real Estate Investment Strategies for Highest Returns
When it comes to the best real estate investment strategies that can generate the highest returns, real estate investors tend to agree that commercial real estate is generally a much better and more profitable option than residential real estate. For this reason, if you want to achieve the highest returns possible on your investment, you might want to consider your options in commercial real estate.
This, however, does not mean that residential real estate cannot be very profitable. Some residential real estate investment strategies can generate significant returns when planned and managed correctly. Investing in Airbnb rental properties in a very active area for tourism, for example, can generate extremely high returns.
So, what makes for the highest returns in real estate?
You as the real estate investor. Your ability to plan your investment and your finances and to be able to accurately assess investment properties and analyze their potential is the best real estate investment strategy when it comes to generating the highest returns.
To be able to achieve this, you need to spend a significant amount of time researching and learning real estate investing and the different ways of analyzing real estate investments for achieving the highest returns.
There is no “best” real estate investment strategies. There are only the best options for you as an individual real estate investor depending on your own criteria and investment goals. But if you want to make the wisest investment decisions and start making tons of money, make sure to check out the available real estate investing websites and sources that can help you invest in real estate more efficiently and more quickly.
Don’t know where to start? Head over to Mashvisor.com, and start searching for investment properties anywhere you want in the US! This will give you access to large amounts of data and real estate analytics that you can use to make your investment decisions and to invest in the best performing investment properties.