In today’s real estate market, investment strategies abound. Some attempt to capitalize on short-term trends, while others are timeless, displaying the staying power of tried-and-true investing best practices. For beginners, there is nothing better than an investment strategy that is both straightforward and easy to follow. With the right preparation and knowledge, any of these timeless investment strategies may help get you on your way to financial success.
Buy and Hold
Arguably, no real estate investing strategy can produce better long-term returns than the traditional buy and hold approach. A buy and hold strategy is where you buy rental properties for the purpose of owning them for many years. Many investors greatly increase their potential profits by also renting them out. Often, investors using a buy & hold approach will specialize in a certain type of property, such as single-family homes. This strategy may work well for beginners who can handle the large initial investment buying rental properties requires, either through securing financing or having large amounts of cash on hand.
Buy, Renovate, Rent, Refinance, Repeat (BRRRR)
Another variation of the buy and hold strategy is the Buy, Renovate, Rent, Refinance, Repeat approach (BRRRR). Using this strategy, investors look for and buy a fixer-upper property, make the necessary repairs, and then rent it out. Once the property has appreciated for at least 6 months, the investor will refinance the property and use the equity to buy another investment property. This approach may be ideal for beginners looking to build a portfolio of rental properties quickly, as it could allow you to use your existing properties to fund new ones. Still, to use the BRRR strategy successfully, you’ll need a trusted network of real estate and home service professionals and detailed knowledge of the housing market.
One of the more challenging investment strategies that may still be attractive for beginning investors with a limited budget is real estate wholesaling. Using this approach, the idea is to locate properties that are for sale below market value, put them under contract, and then find a buyer to purchase the property at a higher price. When done correctly, the investor never actually owns the property at any time. So there may be no need to have large cash reserves for down payments or to secure financing. The trick is to find a buyer in just a few weeks, which means that investors may need excellent sales and marketing skills to use this strategy successfully. But with deals happening so often, there may be potential to capitalize in a relatively short amount of time.
Fix and Flip
House flipping has been a very popular investment strategy for a while now and is harder in some ways now than it used to be. But beginning investors may find this strategy a good option to help them learn a lot about real estate investing. The concept behind fix & flip is to purchase a fixer-upper property, do a few cosmetic improvements, and then sell the property for a higher price. When done carefully, this strategy can be a very successful one. But like the BRRRR strategy, it requires an experienced team of home service and real estate experts to help.
Perhaps the best part of real estate investing is how many options there are to choose from. In this way, investors can choose a strategy that fits their skill set and financial goals. By using one or more of these timeless real estate investing strategies, both beginners and seasoned professionals may be able to invest their way into greater wealth and financial freedom.
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