What Do I Mean by Types of Real Estate Investement Strategy?
Do you know there are different types of real estate investment strategies? What types of real estate investemnt strategy suits you? It just makes sense to look for an appropriate Real Estate Investment strategy that suits your business personality and goals.
This article contains everything you need to know about the different types of strategies open to you.
Which Investment Option Is Right for You?
Determining this comes down to the type of person you are.
Short Term Real Estate Investments
These types of investments focus on realizing profits within a short period of time. What kind of time scale is realistic? Usually, this is within 5 years.
This can be exciting because it’s possible to make a lot of money quickly.
Of course the more short term the investment, the greater the risk, especially if you don’t have a 100% understanding of the numbers.
Long Term Real Estate Investments
This strategy focuses on long-term profits over a long period of time. What kind of time scale are we talking about? Approximately 10 years.
This strategy may not be as exciting or fast, but it is safer and often far more profitable over the long haul.
Types of, Long-Term and Short-Term, Real Estate Investment Strategy
Below are 13 different types of Real estate Investment Strategy.
1) Buy and Holds
These are long term investment strategies, where an investor purchases a property and holds on to it for an extended period.
The owner may have the intent to sell it down the line, but will usually rent out the property to help with buy and hold real estate financing.
2) Airbnb Investment Properties
A specific example would Airbnb properties. These can also be a type of buy-and-hold property that still make money in the interim by means of vacation or short-term rental.
3)Negative Gearing
Negative gearing is linked with the aforementioned buy and hold strategy.
With negative gearing, the rental income that you receive will be less than the expenses that you are paying. In other words, you will need to pay money every single month out of your wage or from other sources of income to keep that property going in order to avoid defaulting on the mortgage or loan payments.
You will lose money for a certain period of time but the property goes up in value so that when it comes time to sell you will make much more money back.
That eventual sale more than compensates for the short term losses. The end result is a long term profitable investment.
4) Fix and Flips
In essence, you purchase a property that is selling for a below-market price.
The reason for the below market price will usually be that the property is in a distressed situation and is in need of extensive renovations.
What you do, at this point, is to renovate the property at your own expense and then resell it for a decent profit.
5) Commercial Real Estate
Commercial real estate is a property that is used exclusively for business purposes and that is leased out to provide a workspace rather than a living space.
Take note that most lenders will be more willing to loan for the housing market than for the commercial market.
6) Passive Investments
It means not getting your hands dirty and giving your money to someone else to make the investment happen.
This might be a realistic option for later in your investing career when you have more funds to invest but less time for hands-on activity.
7) Real Estate Wholesaling
A wholesaler finds a seller who wants to put their property up for sale that has not yet gone on the market. The wholesaler finds a buyer and then is entitled to a share of the selling price.
8) Creative Real Estate Investing
This strategy involves finding creative ways for investing in real estate without bank loans or big down payments.
An example: purchasing an abandoned property and reselling to another investor.
9) The Hybrid Strategy
Based on both the flip and buy-and-hold strategy.
Here are the four main steps this strategy takes:
1: Purchase a property or properties that need help
2: Upgrade/renovate
3: Hold the property for the long-term, rent it and, at the same time, observe the market just to be up to date with what’s happening.
4: Sell the property when the market looks favorable.
10) The Joint Venture Real Estate Investment
It is self-explanatory but to clarify, this is an arrangement where two or more parties agree to combine their resources for the purpose of buying and selling a property or properties.
11) Rent-to-Own
Rent-to-own investing is where a tenant rents your property but with the option to buy it over an agreed upon fixed period of time.
12) Dual Occupancy
Dual occupancy is creating two or more rental incomes from one title.
That may be done by adding an additional house on the existing land or adding an annex onto the back of the purchased property.
Thereby greatly increasing the resale value.
13) Development
Rather than just subdividing you might take a block of land and build townhouses or villas or units and then go ahead and strata title those properties.
Strata title allows individual ownership of part of a property combined with shared ownership in the remainder via a legal entity, the owners’ corporation.
Are You a Risk Taker That Wants to Make Fast Cash?
If so, you will likely prefer short term real estate investments.
Are You The Cautious Type?
Perhaps you prefer to take things slow and reap bigger benefits in the long term?
In the story of the tortoise and the hare which one do you relate to more?
Check the options here, choose the one that matches your style and you will now be ready for action.
Part of that action will no doubt be to develop an online presence. The team at DDW can help you to do that in an effective and economical way. Connect with us right away to get the ball rolling.