So, you want to become a real estate investor in today’s market? Smart thinking! Real estate investing remains a good career path for individuals seeking ways to build their future wealth. However, you can’t just enter the business without having a strategy first. Hence, comes the need to learn the different real estate investment strategies.
While researching which strategy you should follow (which is probably how you came across our blog), you’ll find that there are numerous strategies. Some have been around for decades, while others are somewhat new in the business. Regardless, these real estate investment strategies are the simplest and easiest entry-level strategies in the market. Although there is no absolute best one, these are the top strategies that any beginner real estate investor can comprehend and use to make money. Let’s have a look at them!
Note: To learn more about all different aspects of real estate investing, continue reading our blog.
Real Estate Investment Strategies: Rental Properties
Even though this type of real estate has existed for hundreds of years, it’s still the first option for beginner property investors to consider today. For many reasons, this type of real estate investment strategies is preferred and recommended by many experts in the business. To start with, a real estate investor has two options for making money with rental properties:
- Long-term rental properties: also known as traditional rentals. These are the oldest yet most common real estate investment strategies in which property investors rent out to tenants for extended periods of time.
- Short-term rental properties: these are relatively new in the real estate investing business. Here, property investors list their investment properties on sites like Airbnb and HomeAway and rent them out for shorter periods of time (ranging from one night to a few months).
The great thing about these real estate investment strategies is that they both allow property investors to build a steady source of rental income. Keep in mind, however, that which generates a higher rental income mainly depends on the location and type of your investment property. So, make sure you perform a real estate market analysis and an investment property analysis before you choose one rental strategy over the other.
To help you out in this regard, check out Mashvisor’s investment property calculator. This tool allows you to analyze different rental properties in different locations based on a number of metrics. You can easily compare these locations and find the best performing rental properties which eliminates the need to perform time-consuming analyses.
To look for and analyze the best investment properties in any city and neighborhood of your choice in the US real estate market, click here.
Real Estate Investment Strategies: Buy-and-Holds
This type of investment strategy works perfectly with rental properties. Buy-and-hold is, in fact, one of the main reasons why many investors around the world consider real estate investing. Buy-And-Hold works as follows: a real estate investor simply buys a property and holds it for a really long time. You don’t even have to use it as an investment property and rent it out! The longer you hold the property, the more value it’ll gain over time – in real estate investing, this is called appreciation. The beauty of this type of real estate investment strategies is that the real estate investor can sell the property after a long time for a high price, making an effortless profit.
A few things to remember before investing in buy-and-holds are to:
- Go for a buyer’s market to get a good property price.
- Make sure the real estate market also has a high potential for real estate appreciation in the medium and long term.
- Hold the property for a number of years until you enter a seller’s market and then sell it to guarantee the highest potential profits.
Real Estate Investment Strategies: Fixer-Uppers
If you’re not into investing in real estate for a number of years until you receive profits, there is a way where you can cash out quickly. Fixer uppers are a type of real estate investment strategies where property investors can make money in the short-term only. If this is your strategy of choice, then what you have to do is find distressed investment properties which you can buy for a cheap price. These investment properties typically require some renovation (fixing). After performing renovations and some maintenance, you’ll have to sell it to a homebuyer or another real estate investor as soon as possible to reap in the rewards.
Looking for a cheap investment property within your budget? Click here to use our Property Finder and find properties in the city of your choice in a matter of minutes!
This is another one of the oldest, yet most common real estate investment strategies. If you’re like me and you used to watch Extreme Makeover: Home Edition, then you’d know what I’m talking about. However, you should bear in mind that this strategy requires a lot of work – it basically becomes your full-time job. It also requires a strong network and some good knowledge of the real estate market to make sure you can find under-valued investment properties, to do the repairs efficiently, and to find a buyer for the fixed property.
Which of These Real Estate Investment Strategies Is the Best for You?
Of course, there are other strategies to consider in the real estate investing business. These, nonetheless, are the most common and easiest for beginner property investors. The question remains: which one should you go for? It’s important to answer this question based on your personal situation – not how others made their money in real estate. What worked for one real estate investor will not necessarily work or you!
To make the best decision, take into account:
- The type of your target property: multi-family homes, for example, work best for long-term rentals. Foreclosures, on the other hand, are distressed properties that you can buy as a fixer-upper.
- Your budget: You should never buy a property that you can’t afford! So, if you can’t afford to buy a fixer-upper fully in cash and then spend more on renovations, perhaps it’s best to take a loan for a rental property and use rental income to repay the loan as you hold the property.
- Financial goals: As mentioned, if you’re looking to make quick money from real estate investing, a fixer-upper would be your best option. If you think investing for real estate appreciation yields better returns in your real estate market, then a buy-and-hold is the answer.
And don’t forget about the location and conducting a real estate market analysis, as this will also affect which real estate investment strategies are best. For more on this topic, I suggest reading this: The Real Estate Market Analysis Tool That Every Investor Needs.
Finally, make sure to sign up with Mashvisor and check out the tools we provide – like the investment property calculator and property finder tool. These help property investors find the most profitable and suitable investment properties based on accurate readings and projections to determine the return on investment before even buying an investment property!
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