Real Estate Investment Strategies Explained

Real estate investing isn’t one size fits all. There are a number of different approaches to take when buying investment property, and what works for one investor may not work for another. To determine which strategy is best for you, you need a solid understanding of each of them and how they work. Here are the 6 main investment strategies used for real estate:

1. Buy and Hold - Buy and hold refers to the investor who purchases a property and plans to keep it long term. They aren’t interested in turning it around with a quick sale in a few months or a year, with the hopes of netting a profit. Instead, they’re looking to gain profit through monthly rent payments from tenants as well as slow and steady appreciation.

1. Fix and Flips - Fix and flips are the opposite of buy and holds. These properties are in need of repairs and updating, and because of this, investors can often get them well under market value. Once the investor takes ownership, they make the repairs to bring it back up to market value, and then list it for a (hopefully) quick sale to a new owner.

1. Vacation Rentals - Vacation rentals have become incredibly popular in recent years, thanks to sites like airbnb that connect property owners with tourists looking for a place to stay. While these are generally owned for several years or more, like buy and holds, they function differently because they are leased for much shorter terms (nightly, weekly, or monthly).

1. Wholesaling - Wholesalers work as middlemen, so to speak. They function to connect sellers with buyers, and then they take a certain percentage of the sale price as their payment for making that connection. Sometimes wholesalers will have to actually buy the property in question, or at least get it under contract, with their goal being to find a new buyer to take on the contract ASAP.

1. Passive Investing - Passive investing works just like it sounds; the investor is not actively involved in the day-to-day aspects of buying or managing property, but functions as more of a silent investor instead. This could be done through REITs (real estate investment trusts), or even by acting as a lender to another investor and making money off the loan’s interest.

1. Turnkey - And finally, we’ve reached my favorite real estate investment strategy: turnkey. With turnkey investing, the investor works with a local turnkey provider who has an inventory of cashflowing properties ready for purchase. The investor chooses the property that best meets their needs, and they purchase it. The turnkey provider handles virtually everything else, from tenant screening to handling complaints to property management.

So there you have it - a basic overview of the main strategies for real estate investment. As I mentioned, different strategies work for different investors. It’s up to you to decide which strategy aligns best with your investment goals and who you are as a person. Dig into them to learn more, compare and contrast them, and don’t make rash decisions. Arming yourself with as much knowledge as possible is the best way to ensure you make sound investment decisions from start to finish.