THE BEST REAL ESTATE INVESTING STRATEGIES
To make money in real estate, you need to be able to find the right strategies. If you’re a new investor who’s just getting started with investing your funds in fix-and-flips or rental properties, worry not, there are still plenty of options available. At MY SMART COUSIN, we want to help you make your first step in real estate investing as easy and painless as possible. As a seasoned Real Estate Investment Coach, we help aspiring homeowners and investors, with a special focus on Black and Brown folks and women, implement investment strategies custom-designed for their needs, and buy a house for the price of a car. We lead you through every step of the process with a personalized roadmap, and cash flow management services designed specifically around what is best suited for you. With so many ways to make money in the real estate industry, it can be daunting for beginners. This is why we’ve written this article! In this blog, we’ll outline a few time-tested strategies that work well for any investor looking to start their investing journey, or a more seasoned investor seeking to benchmark their approach. · INVEST IN A REAL ESTATE FUND OR TRUST There are almost as many channels for investing in real estate as there are real estate investors. However, not all of them are created equally. For a brand new beginner with limited-to-no time to spare on finding, evaluating, and managing properties, one of the best ways to learn the ropes is to invest in a real estate fund or real estate investment trust (REIT). Real estate funds and trusts offer several advantages over buying a physical and stand-alone asset: · First, they enable newcomers to leverage the buying power of a large collective of like-minded investors. A real fund or trust will purchase hundreds or even thousands of properties within a real estate class— shopping centers, for instance— or a broad segment such as commercial property. New investors with no or limited free time can participate in the returns on these properties entirely as passive investors. · Second, an investment that contains hundreds of properties versus one, by definition, has less concentration risk, and the potential for greater resiliency in economic downturns. · Additionally, funds and REITs are traded on an exchange, just as stocks, bonds, currency, and commodities are. Exchange-traded assets have much more liquidity than a single house or commercial property, which can take weeks or months to sell. As such, funds and REITS are great options for investors who want the flexibility to be nimble across funds or cash out quickly. · Finally, real estate funds and trusts often have access to exclusive deals and properties that individual investors would not be able to purchase on their own. For these reasons, investing in a real estate fund or REIT is one of the smartest, and certainly, easiest, ways to get started in real estate investing. · BUY A PROPERTY AND RENT IT OUT TO TENANTS A rental property can be a great investment, providing a steady stream of income and the potential for long-term capital appreciation. Additionally, with strong renters in place and the use of a property manager who is focused on customer service and operations, a rental property can be a great long-term and relatively passive investment. Finding renters that have a strong rental and credit profile can be among the biggest worry for new and seasoned investors alike. To attract and retain high-quality tenants, it is important to screen applicants carefully, and apply the same focus and enthusiasm to maintenance as was applied to acquisition. With planning and consistency, it is possible to find rental customers who will value your product— your rental property unit— and service, and engage in a mutually beneficial relationship. · PURCHASE A FIXER-UPPER AND RENOVATE IT YOURSELF If you’re handy with a hammer and don’t mind getting your hands dirty, then purchasing a fixer-upper and renovating it yourself may be an ideal real estate investment strategy. Not only will you be able to save on labor costs, but you’ll add value to the property through your improvements, and gain firsthand knowledge of the property’s strengths— perhaps a solid roof that has many more years of life— and drawbacks— maybe a furnace that can only last another winter or two. Whether you’re inclined to do the work yourself or hire contractors, be sure to do your homework first and consult with a real estate agent or contractor to get an accurate estimate of the renovation costs. Otherwise, you could find yourself in over your head—and in debt—before you know it. But if all goes well, you could end up with a solid rental investment that’s worth much more than you paid for it. And that, my friend, is the best kind of investment. · FLIP HOUSES FOR QUICK PROFITS If you’re looking to make a quick profit in the real estate market, typically on the order of three to nine months from purchase to sale, then flipping houses may be the perfect strategy for you. While it can be a risky venture, there are several ways to minimize your risk and maximize your profits. One key to successful house flipping is to choose properties that need only minor cosmetic upgrades. Additionally, it’s important to have realistic expectations about the value of the property after renovations are complete. Lastly, timing is everything when it comes to flipping. Seek to purchase properties when no one else is looking and competition is thin— Thanksgiving through New Year’s, for instance— and sell when demand is high— May through August when school is out and families are looking to move and get kids settled for a new school year. FINAL THOUGHTS So, which real estate investment strategy is right for you? There’s no one answer as it depends on your goals, financial situation, and comfort level with risk. No matter what route you decide to take, always do your research and consult with a professional