Real Estate Investment Strategies; The Best Ways to Make Money as a Beginner in The Real Estate Market
Going into the real estate market isn’t as easy as most people think. Also, it isn’t a get rich quick kind of industry.
In order to build wealth through the real estate market, you need to follow different strategies. These strategies will help you grow in the industry and will help you build wealth too.
This article will show you some of the strategies that big players in the industry follow. Here are some of the things you need to learn as a beginner in the industry.
What Are Real Estate Investment Strategies?
Real estate investment strategies are methods adapted by investors in order to make profits through the real estate market. Some of these methods are done through acquisition, ownership, management, and sales of properties.
These strategies can differ due to different factors. However, understanding and utilizing the right real estate strategies is the best way to get profit in the real estate industry.
A good strategy will help investors minimize risks, make the best decisions, and also maximize their profits. It’s just like having all the infinity stones.
How To Implement a Real Estate Investment Strategy
Research
Obviously, before investing your money into anything, it is only advisable that you gather information on it. Online resources and talking to other investors is a great way to conduct your research.
As an aspiring real estate investor, you need information on market conditions, property values, rental rates, and local laws to understand the risks and opportunities in the area.
Set Goals
In order to implement a certain strategy, you need to set achievable goals and work with strategies that align with those goals.
You can have a short-term or a long-term goal for a particular property.
An example of a short-term goal in real estate is buying a property and renting it out for steady income.
Also, an example of a long term goal is buying a property and holding until the value appreciates in the future.
Get Yourself a Team
Everybody needs help, especially in the real estate industry. As an investor you might not have the time or know your way around every problem in the market. Which is why you need a team of specific personnel.
For instance, you need real estate agents and attorneys; you also need property managers and contractors.
Financing
Most big league investors secure financing via mortgages, loans, or private lending. However, every investor has to pick a financing source that aligns with their strategies.
After following these steps, the only steps remaining are; buying and managing of the property which are also important in implementing a real estate strategy.
Five Real Estate Investment Strategies
Real estate investment is one of the most profitable ways to build wealth over time. However, it is crucial that you have a solid strategy that can cover you. This way you minimize risk and maximize profit.
Here are some of the strategies that real estate investors use to conquer the market:
1. Buy and Rent
This is a very common strategy in the US. An investor will buy a property and get tenants who will pay rent on a regular basis to stay on that property.
Also, in the US, properties that go for rent the most are single family homes, condos, and townhomes. However, you have to do your research and get places where there are high demands. This way you get your profit as quickly as possible.
2. Buy and Hold
The buy and hold investment strategy is an investment approach where the investor buys a property and holds for a short-term or a long-term.
Generally, what an investor does is to buy an undervalued property and then fixes it up. Then they put the place out for rent in order to generate income.
When the property appreciates, instead of taking cash for it; they invest it in another property using the 1031 exchange rule. This strategy is great because you can get a deduction in your taxes from it.
3. Fix and Flip
The fix and flip strategy is more risky. It involves buying a roughed up and undervalued property and then renovating it. After renovation, you sell the property for a profit.
4. Wholesaling
This is a real estate investment strategy that involves finding a property below market price and selling to an investor at a higher price.
In wholesale, you can do this without owning the property. The price you tell the investor has the property price and your fee attached to it. So you are like a middleman.
5. BRRRR
Buy, rehab, rent, refinance, repeat. This investment strategy involves buying a distressed property, renovating it, renting it out, and refinancing it in order to get equity.
The equity from one property can be used to purchase another one. This strategy gets you constant cashflow from several properties.
