5 Active Real Estate Investing Strategies
5 Active Real Estate Investing Strategies
Buy and Hold Strategy
A buy-and-hold strategy is one in which an investor purchases a rental property with the intention of keeping it for an extended period of time. The property is employed to produce repeated cash flow during that time, increasing the owner’s profit.
The advantage of selling the property later, when its value has improved, is that the real estate investor can do so if doing so is advantageous to them.
Long Term Rental (BRRRR)
BRRRR is an acronym for buying a house, renovating it, renting it out, refinancing it, and repeating the process with the money from the mortgage refinance. A system for recurrent expansion is BRRRR. For the system to function, you must be able to get a “cash-out” refinance.
The market worth of the investment property should exceed your total purchase and renovation costs once you have finished fixing it up. The rental is refinanced using the ARV, and you are handed the equity, or difference, in cash. With the cash-out amount, you buy your next investment property and start over. You can steadily increase your assets and investment income using this technique.
Short Term Rentals
A short-term rental is a furnished home where occupants stay for less than a month. Short-term rentals often have higher nightly rental rates than long-term residences. Short-term rentals necessitate more frequent maintenance tasks like cleaning and repairs because of the high occupant turnover.
Those who are moving and need short-term accommodation, persons on vacation, and business travelers who are in the area for a few days are the main target audiences for short-term rentals. With the help of online home-sharing websites like VRBO and AirBnB, anyone can turn their house into a short-term rental. Renting out a residential property you already own for a brief period of time is a simple way to start investing in real estate.
Fix and Flip
To “fix and flip” a house, you should purchase it for less than market value, make any necessary improvements, and then sell it for more money. You must be able to purchase the property for less than the market value and your estimate of repair costs must be accurate.
You should also be familiar with the local housing market where the house is located. The Days on Market (DOM) data serves as an example of how you should always look at how long it takes for properties to close. Before incurring maintenance costs, the rehabbed home must be sold in order to successfully “flip” a property.
Real Estate Wholesaling
In wholesale real estate, you look for a home that real estate investors would consider a good prospect and sign a purchase agreement to buy it. The sale and purchase agreement is then “bought” by an investor from you. The real estate investor, not the real estate wholesaler, purchases the property. The rights to buy the property are what the real estate distributor sells, not the actual property itself.
Using a title company with experience in the wholesale contract assignment market and the ability and desire to manage double closure transactions is part of this business.
