The Best Short Term Investments in Real Estate

“How to make quick money in real estate?” That is a question that everybody wants to know the answer to. If you were to ask us, our only answer would be short term investments.

Real estate is a very lucrative business. In fact, it’s been the ultimate way to making money for many real estate investors. All it took for them is to make the right decisions based on the right calculations.

In this blog, we are going to present you with the best real estate investments for short term investing. Moreover, these investment strategies have proved to be very rewarding in terms of finances. Therefore, we recommend that you take a look at them and decide for yourself what suits you best.

Related: Real Estate Investment Strategies: Creative vs. Traditional Investing

#1. Short Term Investments: Wholesaling Real Estate

Wholesaling real estate is one of the best short term real estate investments for beginners. There are two reasons for this 1) the quick money, of course, and 2) there is no need for capital. A real estate investor can engage in wholesaling properties with as little as a couple hundred dollars.

The wholesaling process is very simple. First, you find a real estate property that is selling for less than the market value. Keep in mind, most of these properties are in a distressed condition. However, the second step is to assign it to a contract for the said price. Third, you find an end buyer who is willing to purchase the property for a slightly higher price. The final step is to close the deal. There are two things to keep in mind though. The first one is making sure that the difference between the prices is reasonable as that is your share of the deal. And the second one is that you do not have much time to find the end buyer. Usually, wholesaling contracts state a time frame during which you are expected to find a buyer.

#2. Short Term Investments: Fix-and-flip Real Estate

The fix-and-flip strategy is also known as the “flipping houses” strategy. This is another form of short term real estate investment strategies that promises quick money. But, it is a high-risk investment and, therefore, we do not recommend it to beginner investors. So, let us explain the process first and then we’ll mention the reasons why it is not suitable for beginner investors.

The Fix-and-flip Process:

1. Find a property that is in a distressed condition for below market value.
2. Get a home appraiser to inspect the property and estimate the value + the repair value.
3. Get in touch with handymen and plan the renovation process.
4. Proceed with the renovation work.
5. Once the property is ready, do some math to make sure the costs did not exceed the budget.
6. Set a price that compensates for the repair costs in addition to leaving a profit margin for yourself.

Now, why is fix-and-flip not suitable for beginner investors?

First of all, you will have to purchase the property you intend to fix and flip. This means that you will need capital money to start with. Of course, you have a variety of short term investments financing options, but that is a thing to keep in mind. Second, you will have a limited amount of time to sell the property. In other words, you will have to get rid of it as soon as possible. Otherwise, every day beyond that time limit costs you money. This will have a negative impact on your share of profit in the deal.

Regardless of the downsides, there is no denying that fix-and-flip is a great way to yield high returns. Still, we would not recommend that new investors start off with this investment strategy.

Related: How to Make Money in Real Estate: 3 Tips that Work

#3. Short Term Investments: Airbnb Rentals

Airbnb rentals have been so popular lately as a way to make quick money. This investment strategy has shown to yield high returns in the short term for many investors. Of course, it took some planning and due diligence. However, it is all for the purpose of having a higher return on investment.

The best aspect of Airbnb real estate properties is that they are of great benefit in the short as well as the long-term. Besides the Airbnb rental income, the property tends to appreciate as long as you hold on to it. Therefore, when you decide to sell it, the property would have increased in value.

As for the process, it is very simple. After buying an investment property, you list it on Airbnb for rent. Moreover, you won’t have to buy a whole property if you can’t afford it. Simply, you can rent out a room in your own house and still make money through short term investments.

Related: Airbnb Rentals: Finding Income Properties Using a Heatmap

What is Important to Consider?

The best short term investments come down to two things: the market analysis and the property analysis process.

You cannot possibly invest in any type of strategy without analyzing the real estate market. This means that some locations are better for certain investment strategies than others. For example, Airbnb rentals are best in major cities such as New York and Paris. It might not be a good idea in a rural area, though.

Moreover, the real estate property analysis is another crucial procedure for short term investments. When you analyze the real estate market, you are basically studying the surroundings of the investment property. You are also studying the possibilities associated with your investment strategy. On the other hand, with the property analysis procedure, you are looking into the property itself. There is no way you can get your hands on a good investment unless you perform this type of analysis. The capitalization rate, the cash on cash return and other measures are essential to figuring out whether a property is worth your money at all. So, whatever short term investments you choose to work with, make sure you perform the necessary analysis first.

Final Words,

Short term investments have helped many investors achieve the financial independence they’ve always wanted. Even though there are other strategies, we only chose the best short term investment options for you. These short term investment strategies have helped so many people in making money in real estate. What’s even better, they got the chance to learn about real estate properties in no time.

At first, it will take some time for a novice investor to absorb it all, but believe us, it is worth the time and money investment. All you need to do is to set your feet at the starting line and you will no longer wonder how to make money in real estate. To help you get started, Mashvisor’s blog is a great resource. Make sure you check it out to learn all about the short term investments in real estate.