Real Estate Investment Strategies Explained
Real estate investing isn’t one size suits all. There are a variety of different approaches to take when buying investment property, and what works for one investor might not work for another. To determine which strategy is perfect for you best, you will need a solid knowledge of all of them and exactly how they work.
Buy and Hold – Buy and keep refers to the buyer who purchases a property and plans to keep it long term. They aren’t thinking about turning it around with a quick sale in a few months or a 12 months, with the expectations of netting an income. Instead, they’re looking to gain profit through regular monthly rent obligations from tenants as well as slow and regular gratitude. Fix and Flips – Fix and flips are the opposite of buy and holds.
These properties may need repairs and updating, and because of this, investors can get them well under market value often. The investor takes ownership Once, they make the repairs to take it back up to market value, and then list it for a (hopefully) quick sale to a fresh owner.
Vacation Rentals – Vacation rentals have become incredibly popular in recent years, thanks to sites like airing that connect property owners with tourists searching for a place to stay. While these are typically owned for several years or more, like buy and holds, they function differently because they are leased for much shorter terms (nightly, weekly, or monthly).
Wholesaling – Wholesalers work as middlemen, as they say. They function for connecting sellers with purchasers, and then they take a certain percentage of the sale price as their payment for making that connection. Wholesalers must actually buy the house involved Sometimes, or at least obtain it under contract, using their goal being to discover a new buyer to take on the agreement ASAP. Passive Investing – Passive trading works exactly like it seems; the investor is not involved in the day-to-day aspects of buying or managing property actively but functions as more of a silent investor instead.
This could be done through REITs (real estate investment trusts) or even by performing as a lender to another investor and making money from the loan’s interest. Turnkey – And lastly, we’ve reached my favorite real estate investment strategy: turnkey. With turnkey investing, the investor works with a local turnkey company who has an inventory of cash flowing properties ready for sale. The property is chosen with the trader that best meets their needs, and they purchase it. The turnkey provider handles virtually everything else, from tenant verification to handling complaints to property management. So there you have it – a basic overview of the main strategies for real estate investment. As I mentioned, different strategies work for different investors.
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It’s your decision to choose which strategy aligns best with your investment goals and who you are as a person. Dig into them to learn more, contrast and compare them, and make rash decisions don’t. Arming yourself with as much knowledge as is possible is the ultimate way to make sure you make sound investment decisions from begin to finish.
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