It may seem pretty ambitious for new investors to get into the business of buying, selling and renting homes. But like any other field of personal finance expertise, real estate investing comes down to few simple basics.
What you will need to master the art of investing in real estate is the right strategies, patience and a willingness to learn. The most common and traditional strategy used for real estate investing is buying and holding. There is a variety of different strategies used, some of which are simple and can be carried out in just days while others can be used on a continuing basis to create a long-term value.
However, keep in mind that the aptness of each strategy depends on your goals, risk tolerance and local housing market. Here are the strategies.
1. Fix and Flip
This strategy involves buying a property that needs small improvements and so after doing the repairs such as flooring, walls, landscaping and paint, you can sell it for a higher price to gain profit.
2. Buy and Hold
Buying real estate with the intention of renting it to generate income. It can generate monthly cash flows and you can make use of this strategy for long-term. Additionally, it can even offer you potential tax benefits for the owner.
This strategy involves finding a buyer for a seller and then taking a percentage off the sale.
This has similarities to flipping, but involves finding a buyer for a seller and taking a percentage off the sale. If done correctly, this can be done speedily and with least amount of risk.
4. Buy, Renovate, Rent, Refinance, and Repeat
Possibly the most complex strategy in real estate investing for beginners to implement, this can be used to gain benefits in short-term as well as long-term.
The strategy comprises four steps: buying a real estate, renovating it, renting the real estate to tenants and then refinancing the mortgage later on. And then the process repeats itself.
This particular strategy is more suitable for places where the prices of property are increasing rapidly.