To succeed using real estate investment strategies, start with one specific strategy, laser focus your attention, and gain confidence and experience. Watch for opportunities, stay flexible and respond quickly. Don't just say, "I'm a real estate investor," instead say, "I buy single-family homes under $300,000 in blue-collar neighborhoods, rehab the property, and then owner finance it to families."
It's essential to understand each strategy's intricacies and your investing goals while aligning them with the seller's needs. When presenting offers to purchase a property, offer several solutions. Use the real estate investment strategies below to structure cash, financing, and creative offers.
Value Investing. Buy the worst-looking house in the best neighborhood, add value (rehab) and watch it appreciate.
Income Investing. Create monthly short and long term cash flow wholesaling properties.
Growth Investing. Build your business with a long-term buy and hold.
Structuring the investment. Stack the real estate investment strategies to get multiple paydays. Rental property example - purchase an ugly multifamily apartment building, rehab and lease. The property creates monthly rental income. The value was added with the rehab and appreciation occurs as property values and rental rates increase over time and as the tenants pay down the mortgage every month.
Plus, in 3 to 5 years, cash out the appreciation, tax free by refinancing and taking the equity out of the property. The refinance interest is a tax deduction for your real estate company, and it creates an automatic layer of asset protection because no one will sue if the assets are fully mortgaged and there is nothing to grab. You keep your money in your pocket while using other people's money to grow your business.
With opportunity. Market trends like foreclosures or seasonal factors like vacation rentals.
Continue to increase your real estate investing knowledge. If you are a new investor, you probably don't understand the complex process of putting together a lease option or owner financing offer.
Creating the right team. Professionals with crews to rehab properties, Realtors, attorneys, and title companies to take care of the legal paperwork. If you rehab luxury properties, then your type of contractor will be very different from the contractor that rehabs affordable housing. It's essential to choose the right people for the right job.
Understanding the location. Every city offers unique investing situations due to types of neighborhoods, school districts, and amenities.
Financing choices. Different types of properties require specific funding. Single-family residential and long term rental property can qualify for conventional low-interest financing, but a fix and flip will need hard money.
Also, take into consideration startup costs, time frames, and expected returns.
Keeping in mind your business goals and the above considerations, these are some of your choices.
Rehab and flip. Buy an ugly property, rehab and add value, then sell to a retail buyer.
Wholesaling. Get the property under contract, then assign the contract to a cash buyer.
House Hacking. Buy a multi-unit property, live in one unit and rent out the others.
BRRR Investing. Buy, Rehab, Rent, Refinance, every 4-5 years, you can refinance and pull out the equity.
Airbnb and VRBO.com (vacation rental by owner)
Student or corporate housing
Long-Term. Buy and Hold Rentals in good areas, with low maintenance, and quality tenants.
1031 Exchange. Tax advantages will rapidly grow a retirement account.
Small Apartments, 5 to 100 units. Too small for the big national apartment investors and too big for the mom-and-pop type of investors. Perfect size for the investor building a business. Financing from commercial lenders or local credit unions or banks are required.
Large Apartments over 100 units.
Condos and Townhomes individually owned units that are part of a larger complex. Beware of high monthly maintenance fees, assessments, and association regulations.
Mobile Homes on Land lower purchase prices and increased cash flow from rentals. Limited financing options. Cash is best.
Mobile Home Park owns the land and the homes or lease space to individual mobile homeowners. An experienced property manager is a must.
Land development, timber, agriculture, land leases. Very little cash flow with long hold periods.
Section 8 government assistance, affordable, working-class, or luxury.
Pre-foreclosure/ Short Sales lucrative but takes a large amount of time.
Bank-owned properties With the right Realtor, buying REO foreclosure properties can be headache-free.
Fed up Landlords and properties with vacancies or pending evictions.
Probate properties. Delicate negotiations due to emotional heirs. But probates properties are worth the extra effort and time.
Damage fire/water/sinkhole/structural. Extensive damage needs specialty rehab crews.
Code violations use your diplomatic and problem-solving skills.
Tax deeds. Counties auction off properties with past due taxes. Low cash startup with high % returns.
No matter which real estate investment strategies you choose, a continual flow of motivated seller leads are vital for a successful business. The best solution is to generate both outbound and inbound leads using online software and systems.
The more real estate investment strategies you master, the more solutions you can provide, which equates to more happy clients and more deals done.