Investment Strategies Keep an Eye on the Most Lucrative Types of Real Estate Investments by Ranah Asad July 19, 2018December 21, 2021 by Ranah Asad July 19, 2018December 21, 2021 Show me the money! We can all agree by now that real estate investing is a great way to make money and financially secure our future. The cool thing about investing in real estate is its vast diversity and different options to choose from. Despite its diversity, real estate investors aim for one thing: to find the most profitable types of real estate investments! Keep reading as I tell you about the most lucrative types of real estate investments and how to identify them. Please feel free to leave any comments below or suggestions you may have. How to identify the most lucrative types of real estate investments There are two very important decisions to make when investing in real estate: What type of investment property do I want and what investment strategy suits me best? Rental properties come in all shapes and sizes. Do you want to invest in studio apartments? Are you interested in condos for rent? Or do you prefer townhouses over single-family homes? With so many types of rental property choices, how can one decide? The key to finding the most lucrative types of real estate investments is to look for the following: Location We are back to the old real estate saying: location, location, location! Probably the most important aspect of a successful real estate career is finding the right location. Why? The location determines the profitability of your investment property and everything else related such as the purchase price, appreciation, operation costs, rental income, and cash flow to name a few. To find the most lucrative types of real estate investments, look for a location that has a high demand for real estate and is attractive to tenants. A location that attracts tenants would be one that has great features like schools/universities, work hubs, and low crime rates. Look for a location that has high rental income, good property taxes, and affordable property prices. Related: Location Location Location: What Makes for the Best Place to Invest in Real Estate? The question now is where are these locations with the most profitable investments found? To help make your search for investment properties easier, use Mashvisor’s heatmap and property finder tools. We will give you the properties that have the highest potential returns and that match your search preferences. Click here to use our Property Finder and find properties in a matter of minutes! Positive Cash Flow When searching for the most profitable types of real estate investments, the key is to look for POSITIVE CASH FLOW. Cash flow is the difference between the received rental income and the expenses of the investment property. To identify which types of real estate investments generate positive cash flow, investors must conduct an investment property analysis before making a purchase. To learn more about investment property analysis and how it is conducted read: How to Do Investment Property Analysis. Appreciation Property investors make money in real estate from positive cash flow and appreciation. Appreciation is the increase in the investment property’s value over time. The most lucrative types of real estate investments are those with high appreciation. When your investment property has a high expected appreciation, its value will increase over time. So you will be able to sell the property at a price much higher than its initial purchased value. Related: Cash Flow vs. Appreciation: What Should Drive Your Real Estate Investment Decision? Return on Investment It doesn’t take a mastermind to know that the best types of real estate investments are those that offer a high return on investment (ROI). You want to know how well or how bad your investment property is performing and if you are actually generating capital. The ROI calculation formula is: ROI = (Income from Investment – Cost of Investment)/Cost of Investment Investment Strategy Choosing an investment strategy that suits your needs and financial situation is a very important decision. You can either invest in short-term properties (Airbnb rentals) or in long-term properties (traditional rentals). Both investment strategies are profitable types of real estate investments. Each one comes with its own advantages; you just have to know which is more suitable for you. Most lucrative types of real estate investments 1. Short-term rentals Airbnb rentals are becoming a very popular type of real estate investment. Real estate investors who invest in Airbnb rentals have high potential to make money in real estate. From their name you can tell that short-term rentals are those rented out for short periods of time (usually no more than 6 months). These types of real estate investments are profitable because they offer a higher return on investment than traditional rentals. Plus the rental income is set by the landlord, so you are in control of how much rental income you want to receive. 2. Long-term rentals Traditional rentals come with a lot of benefits and are very lucrative types of real estate investments. The secret to a successful long-term rental is finding the right tenants who will pay their rent on a regular monthly basis. The advantages of traditional rentals are steady rental income and high occupancy rate. Plus when you come to sell your investment property in the future, you will make money from the property’s appreciation value. Related: Traditional Rentals vs. Short-Term Rentals: Which One Is the Right Rental Strategy for You? 3. Fix-and-flips These types of real estate investments are perfect for investors who are looking to make money fast. The trick to these types of real estate investments is finding cheap properties that are easy to fix. The whole point of fix-and-flips is buying properties at below market value and renovating them in order to quickly sell for a higher price than originally purchased. 4. Real estate wholesaling With real estate wholesaling, investors can make a good amount of profit with little or no capital at all. Basically, wholesaling is when real estate investors find properties that are being sold for low market value. Then the investor puts the property under contract and resells it to a real estate investor or homebuyer. Let me give an example to show you that these types of real state investments are lucrative. You find a property that is worth $170,000 and the seller wants to sell it for $120,000. Then you put the house under contract and start contacting real estate investors who are looking for investment properties under market value. After that, you find an investor who is willing to buy the property for $140,000. In the end, you close the deal and the owner gets his/her $120,000 and you make a profit of $20,000! A final thought In order to make money in real estate, you need to find the most lucrative types of real estate investments. It doesn’t have to be hard. With Mashvisor, your search for profitable investment properties can be as easy as one, two, and three. Sign up today and click here to start out your 14-day free trial with Mashvisor. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL 0 FacebookTwitterGoogle +PinterestLinkedin Ranah Asad Ranah is a long-term content writer at Mashvisor with a degree in strategic studies who enjoys writing about all aspects of the real estate investment business. 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