4 Investing Real Estate Investing Strategies to Follow

Posted On Friday, 10 September 2021 21:20

Real estate investing remains a preferred option for earning passive income. Apart from rent, you also generate wealth through price appreciation and equity gains. All you need is to come up with the right strategy. Knowing how uncertain the real estate market gets, you will need a strategy that reduces risk and maximize your returns. Depending on your risk profile and your investment goals, the following strategies can help you build wealth in the long term.

1. Fix-and-Flip

A fix-and-flip is a basic way of profiting from distressed properties. This method involves purchasing a home that needs a makeover, and reselling it after the project is completed. You profit from the value that comes from doing repairs and adding extra amenities. Through a fix-and-flip strategy, you have less competition when you are out looking for a home that needs work. While there is a large cost up front, you can still make a rather large profit in the end. Make sure you consider real estate investing using Instagram and other social media platforms to market your flipped properties. 

2. Buy and Hold

Most investors prefer the typical buy-and-hold strategy. This involves buying a rental property and holding on to it until the price appreciates to a certain level. With this strategy, you take advantage of inflation and rising property values. You can lease it out to tenants up until you are ready to sell the property to other investors. Not only will you be able to generate passive income but you will also enjoy massive tax write offs on repairs and improvements. The challenge here is knowing how to manage the property well.

3. Multifamily Syndication

There is a high demand for multifamily housing since last year as the retirement population grows and many are looking to downsize. Renting a unit in an apartment community is becoming popular among boomers, so you might as well leverage this trend by acquiring multifamily assets. The only problem is financing. Duplexes, townhomes, and condos cost significantly more than single-family homes. To address this, you can always set up an LLC where multiple investors can pool resources to acquire a multifamily asset. Also known as syndication, this strategy allows you to purchase a large rental property with little capital on your end.  

4. Wholesaling

This strategy is not for novice investors, but if executed well, it can result in high yields. You start by looking for a homeowner who has a property that needs more than a simple fix. Next, you and the homeowner will agree to sell the home under a contract. Using your network, you start looking for a fixer-upper investor who is interested in purchasing the property. Once the property is sold, you get paid an assignment fee as agreed under the contract. Wholesaling only works if you are an experienced investor. It also matters to maintain a solid network with other investors as well. 

It’s important to remember that there is no perfect game plan to follow in real estate investing. To truly succeed, you just need to learn the ropes and make careful decisions. 

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