Are you thinking about investing in real estate properties to make money? If yes, then you have probably thought about the various investment strategies in real estate. Before investing a single dollar in any real estate investment, it would be wise if you studied the different strategies relevant to real estate. The strategy you choose plays a huge role in your expectations for profit, risk, and competition. For real estate investors who want to start making money as soon as possible, the investment strategies to follow are the short term investment strategies.
Opting to invest in short term investment strategies is entirely different from long term investing because of the sub-categories involved in short term real estate investing. When you go for short term investment strategies in real estate, you are an investor who is not willing to wait for years to make serious profit on his/her real estate investment. The thing you clearly want is money, and you want it right now. Just because short term real estate investing yields profits in the near future, this doesn’t mean that it is more risky than long term investing. Each one has its own risks and opportunities.
Short term investment strategies have different options for real estate investors to choose from with regards to what they feel comfortable investing in. The strategies can range from rental properties, through real estate wholesaling, to fix-and-flips, and more. Choosing the right real estate investment strategy is relative to the budget you can afford and your adaptability to the location of your investment.
3 Short Term Investment Strategies You Should Know
Making money in real estate does not always require spending money; there are so many diverse opportunities to invest. Real estate wholesaling is one of the ways you can make profit without having to spend any money at all, which makes it one of the most important short term investment strategies. A real estate wholesaler finds a seller who wants to put his/her property up for sale and has not yet gone on the market. The wholesaler then finds a buyer and is entitled to a share of the selling price. To be successful with this real estate investment strategy, you have to network and make contacts in order to have a database of potential sellers and buyers at all times.
In real estate wholesaling, you will obviously be making some important real estate moves and taking major decisions. However, since you are not buying a rental property to keep for yourself for the years to come, to act as your source of regular rental income, you don’t have to worry about such things as rental income, cash flow, real estate investment location, mortgage, professional property management, maintenance, property taxes, tenants, eviction, etc. This minimizes a lot the knowledge and skills that you need to have as a real estate wholesaler.
One of the main obstacles preventing many young and not so young people from investing in real estate is the lack of sufficient cash to buy an income property. With a mortgage down payment of a minimum of 20%, you need some serious savings in order to afford buying a rental property, especially in housing markets where prices can exceed half a million dollar or even a million dollar. In real estate wholesaling, you will have no expenses other than the costs related to getting to know the local real estate market, searching for real estate properties for sale, meeting with and contracting with sellers, marketing the property for sale, looking for buyers, and finalizing the deal. The money you make at the end – and a lot more should be left for you as profit – as commission will soon cover all these expenses.
When it comes to short term investment strategies in the real estate market, fix-and-flips is one of the fastest ways to gain income from real estate investments. It starts with an investor buying a below-average property that is in need of renovations. After renovating it, the real estate investor asks for a much higher price that covers the investment, renovation costs, and a profit margin. It might sound simple but in reality, it requires experience to perfect it on all fronts. The trick is finding out the best way to finance a rental property that needs fixing.
Fix-and-flips are extremely profitable for short term investment purposes if the investor knows how to make it work. To profit from a fix-and-flip, the investor must invest in real estate properties that are considered a bargain or providing a good deal. This requires a level of knowledge of real estate, including location, renovation experience, and negotiating with buyers.
Related: 5 Tricks To Save On Fix-and-Flips
3. Airbnb Rentals
Short term investment strategies are flexible; you can make them what you want them to be. If you have money to purchase a real estate property and you are planning to live in that property, then you are able to rent some rooms on Airbnb. That idea developed from couch-surfing websites, which was considered very cheap but also a bit awkward and uncomfortable for most people. Airbnb developed the idea to give renters a cheaper resemblance of a hotel. If you are living somewhere else and own another property, then renting the entire home on Airbnb for days, weeks, or even months is a possibility too.
Short-term Airbnb properties have shown that they can generate more profit for landlords than the traditional rental strategy. Airbnb rentals are marginally higher in price because of the services that come along with them. The most important reason of profit, though, is that Airbnb rentals are flexible for its users (guests) and owners (hosts) alike. It is always easier to find someone who is visiting your city for five days to rent out your flat rather than finding someone to rent it out for one year. This limits vacancies.
Real estate investors who own long term investment properties will find the switch to short term investment strategies easy. The difference for you as an owner of a real estate property is listing your property on Airbnb and providing the services required to attract customers to your rental property. That is not difficult and is easily manageable despite the higher turnover of tenants in Airbnb flats.
Putting your money in short term investment strategies to gain profit from the real estate market is a valid option for those looking to see profits straight away. Short term investing of course requires the individual to learn faster, be more flexible, and be able to adapt to the new market quickly. You can’t be making money in a short term period without being adaptable to a new investment strategy.