There is no doubt that real estate investing is one of the best ways to make money in both the short and long run. The reason is simple – it is a low-risk investment with a high potential for return and growth. However, just as with any beginning, starting out with property investments can seem like a daunting task. No worries, we are here to help you by showing you the 8 best real estate investment strategies for beginners.
Buy and Hold Real Estate
Buy and hold is a long-term real estate investment strategy that entails buying an investment property and holding on to it for many years. The goal is to keep the property at least until major price appreciation has taken place. But many of the most successful investors hold on to their investment properties even after they have significantly appreciated in value. With buy and hold real estate, you have 2 options: 1) You can either keep your property, maintain it, and passively wait for its value to go up, or 2) You can rent it out to make extra money in the form of rental income. We really recommend option #2 as in this way you will be making money in the short run too (from the rent which your tenants will be paying to you) while building wealth in the long run.
Traditional Rental Properties
The long-term rental property investment strategy is a variety of buy and holds strategies. It simply means that you rent out your investment property on a long-term basis. This is usually done on a monthly basis, but lease agreements can also have a one-year duration. Owning a traditional rental property is among the oldest real estate investing strategies and one to last as even people who cannot afford to buy a home need a place to live. If you are just about to get started in real estate investing, buy a small, cheap, simple property. It’s best to start out small. Once you’ve learned the basics of real estate investments and have become an experienced investor, you can add bigger, more luxurious, and more expensive properties to your portfolio.
Renting out on Airbnb is one of the real estate rental investment strategies. Again, it can be combined with buying and holding real estate for maximum profitability in the short and long run. Unlike traditional rentals though, Airbnb rental properties – or vacation rentals, also known as short-term rentals – are rented out on a nightly basis.
BRRR stands for Buy, Rehab, Rent, Refinance. A real estate investor buys a somewhat distressed property, fixes it and repairs it, then rents it out for at least 6 months, and finally refinances it to buy another investment property. A few tips you may consider are – Buy investment properties below market value. Consider foreclosures, short sales, and bank-owned properties. Build a real estate investment network of property sellers, real estate agents, appraisers, home inspectors, contractors, and other real estate professionals to expedite your deals. Always hire a home inspector to evaluate the current condition of the property so that you know how much you will need to spend on rehabbing it.
House hacking means buying a duplex, triplex, or another multi-family home in order to live in one of the housing units while renting out the rest. As such, it is related to two of the other top real estate investment strategies previously discussed:
- Buy and hold
- Traditional rentals
Fix and Flip Real Estate
Flipping houses requires buying a real estate property in a poor condition, fixing it up to a good state, and selling it to another real property investor or homebuyer. Fix and flip can be one of the best real estate investments for those beginners looking for quick cash.
Wholesaling Real Estate
Wholesaling real estate means that you find a property for sale below market value, put it under contract, and find a buyer. With this real estate investment strategy, you don’t own the property at any point in time. We have other articles that detail this strategy as in each state there are particular rules.
A REIT is a company that owns, operates, or finances income-producing real estate properties. Investing in REITs means buying shares which in turn will bring you dividends in the short term as well as capital gains in the long run.