5 Real Estate Investment Strategies

5 Real Estate Investment Strategies

Investing in real estate is more complicated than just buying and selling homes. To help new real estate investors decide which strategy can work for them, I put together 5 rock solid strategies. It is up to you which strategy you feel more comfortable with.

  1. Buy and hold

This real estate investment strategy is commonly known as rental properties. Becoming a landlord is easier than you think. You buy a property, you advertise it as rent and you sign a contract with your new tenant. Thats where love story ends. You need to know a lot about your data and your rights as landlord or you will find yourself in trouble.

Screening your potential tenants is your first chance of defending. Protecting your property from damage is your first duty. I may paint a little dark picture of being a landlord. But managing tenants can be the most frustrating job you ever had. Do yourself a favor and visit a bookstore or library and get as many books on landlords as you can. Armed with this knowledge, you will be able to create a positive cash flow and a long term relationship with your tenants each time you put the sign For rent on the farm.

With buy and hold strategy, you have in principle 3 income streams at once.

Amortization while you pay your mortgage, you also lower the amount you owe.

Estimate while increasing property increases the value.

Tax incentives As a landlord, you will be able to deduct your investment cost for several years. See tax advisor for professional advice.

Based on this information, you can easily see that even if the rent does not cover 100 percent of your mortgage, you will still be able to generate a positive cash flow.

  1. Turn

This is the art of buying and selling real estate investment without actually taking ownership. In a flip situation, property contracts may be awarded and the person awarding the contract to someone else typically receives a commission for their services. Then you can earn money with real estate without credit check or no money. Because you never get real estate, you do not need to apply for a mortgage.

You only need 2 things to turn home. First, you must find an attractive property that will sell very quickly. Secondly, you need to find a buyer within a very short time. Usually 2 3 weeks. Then you simply change the contract to the new buyer and you will collect your commission on a so called double closing.

This sounds complicated first, but with a little practice you will be able to generate a good income from this. By the way, this is the preferred concept for most real estate gurus that occur in late infomercials.

  1. Rehabs

Rehabs is the most risky form of real estate investment. You are looking for a cheap mortgage property and you hope your preliminary cost estimates provide enough room for a good profit. Yes, thats the theory. Most real estate investors fail with this kind of strategy.

You also have not received the property cheap enough to make a profit or the damage is more extensive than estimated which will offset the cheap purchase price. To do things worst. If during the rehab phase of normally 3 4 months, the market goes south, all bets are suspended. Trust me, I did my share of experience with this and I never told, never more.

  1. Commercial real estate investments

What do you first understand when considering commercial real estate investments? Large factory complexes, malls or perhaps large office buildings. Yes, my answer is much easier. Anything larger than a 4 apartment house, some call it fourplex, is considered commercial. The big thing about commercial real estate is that the value of the property is determined by the rental income it generates and not by how crazy people go with bidding on residential real estate.

Theoretically, there is no such thing as seller or buyer market for commercial real estate. I wrote a complete article about the pros and cons of commercial real estate. So I keep this short. Personally, I love commercial real estate. Obviously, commercial real estate is more or less limited to beginners, as commercial real estate lenders want to see some kind of past real estate investment experience. But if you have some experience, go for it. As an added advantage the competition is significantly less.


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