Next to stocks and bonds, real estate is one of the greatest investments people are making. Real estate and stocks are complete opposites. While stocks are highly volatile, intangible, and are affected during a recession, real estate is more stable, is tangible, and isn’t as affected by recessions. But both give you great returns. It’s clear to see why so many people are investing in real estate these days. But there is no one way to invest in real estate, there are several strategies to it. You need to pick the right one for you to get the best returns.
1. Buy and Hold
If you want a long-term investment with a steady flow of cash, buy-and-hold investments are for you. This is when you buy a property to rent it out. It is also known as traditional leasing. This property can be a house or an apartment and is usually rented out for long periods. The great thing about this investment is that you get a positive cash flow as long as someone’s renting out your property. That is why it’s important that you do research on the market and neighborhood you plan to buy property from. If you don’t know what to look for in the market, you can always get a real estate agent to help you.
2. Fix and Flips
Another common investment strategy in real estate is the fix-and-flip. As its name suggests, these are properties that are bought, flipped, and sold. It’s supposed to be a short-term investment. But if you don’t do the “flipping” part right it can turn into a long-term investment, and then a long-term headache. When it comes to fix-and-flips, time is money. The more time you spend renovating the property the more money you lose. The moment you find a property you should get a contractor and inspector right away. They will tell you what kind of work needs to be done. That way you already get to outline your objectives and the costs of remodeling ahead of time.
3. Airbnb
Airbnb investments are technically buy-and-holds. The main difference between the two, however, is that Airbnb’s are only rented out for short amounts of time. They’re what you call a vacation rental. Some people prefer Airbnb investments over traditional ones. Depending on your location and the market you can earn more from an Airbnb investment. But, there are different pros and cons to the two so make sure to do some research as well before buying Airbnb investment properties.
4. Commercial
Commercial real estate is not for small investors or beginners. Investing in commercial property can cost a lot of money, but it has high returns and is a great addition to any portfolio. Commercial real estate rents out to businesses to sell their products or services.
5. Passive Investments
If you’d rather not buy any actual real estate, but still share in the benefits of investing in it, you can do so through a Real Estate Investment Trust (REIT). These are groups of investors contributing to invest in large property such as a skyscraper and malls. Each investor gets back a share of the profits with little work and little risk. However, a small risk is still a risk. To know if REITs are a good investment for you, seek a financial adviser.
6. Real Estate Wholesaling
Another way to invest in real estate without actually buying real estate is through real estate wholesaling. What you do in real estate wholesaling is find a seller that doesn’t have their property on the market yet. You are then in charge of finding a buyer for this seller and you get a share of the profits. You’re essentially the middleman. Now you must be wondering: what’s the difference between a wholesaler and a real estate agent? The main difference is that you’re unlicensed. Being a wholesaler sounds simple, but it isn’t. It takes an ambitious person with good connections and a large network for wholesaling to work. If you happen to be an ambitious person with a large network in real estate, then it just might work out for you.
Real estate will always be a great investment because people will always need a home. If you’re looking to invest in real estate but don’t know where to begin. Just take a look at this list and see which investment strategy fits your goals. There is an investment strategy for everybody. Whether a first-time investor or an experienced one looking to diversify their portfolio.