Real Estate Investing 101: Identify Your Investing Style
Are you just starting on your real estate investing journey? Many newcomers are surprised to learn that there’s more to making money on the real estate market than buying and selling. These are some of the most popular strategies real estate investors use to create profits. Which one is right for you?
Buy And Hold
Buy and hold investors play the market like stocks. They buy properties when prices are low, then hold them until values are high. During the holding period, some investors choose to offer their properties as rentals. Apartment buildings are also a popular option for buy and hold investors, as these properties are always in demand.
Buy and hold investors might run into problems with out-of-control cash flows. Make sure you have plenty of backup cash to keep you afloat until the next sale.
Short Term Rentals
Sharing apps like Airbnb are changing the way short term rentals are done. Instead of pumping money into sterile timeshare properties, travelers are choosing a more home-like environment during their vacations. Many real estates investors concentrate on maintaining homes in various locations and offering them as an alternative to more traditional temporary accommodations.
Vacation renters can be particularly hard on properties. Check your insurance coverage to make sure you have access to enough cash to repair or replace any damages your visitors leave behind.
Fix And Flip
Made popular by a plethora of cable television reality shows, fix and flippers purchase distressed properties at low costs. They then spend some time correcting cosmetic defects, sprucing up any signs of disrepair, and making the property ready for new residents.
A quick sale ensures maximum profit. However, those can be hard to find. If the market suddenly changes, you could find yourself stuck with mortgage payments you weren’t prepared to meet. Always have a backup plan to protect your personal assets.
From the corner drug store to a multi-unit strip mall, commercial property presents a unique opportunity for more advanced real estate investors. It takes a lot of buying power to acquire commercial property. However, commercial leasers usually last much longer than their residential counterparts, which means a more secure and longer-lasting income stream.
Keep in mind that empty commercial buildings take longer to fill. Check your resources to ensure you can survive a long period at less-than-optimal occupancy.
Real estate investing is a diverse discipline. Choose the strategy that works best for you to enjoy a long and happy career.
If you are in the market for a new investment property, sure to contact your trusted mortgage professional to discuss financing options.