Real estate is often considered one of the best investments to make. If cared for properly, the value usually increases over time, and people are always going to need places to live.
There are a large number of different ways in which people can use the investment of a home or building in order to benefit themselves financially. Below are ten of the best real estate strategies to maximize investments:
1. Just buy land
Land that has not yet been developed is one of the most versatile real estate strategies that exists because there are so many different ways to develop it. The land itself will not depreciate in value, and as long as it is suitable for construction, it can be built on either by you or by someone else, and you can easily turn a profit on whatever you have paid.
2. Flipping houses
A common real estate strategy that has emerged is flipping houses. This is where people buy houses that badly need to be fixed up, they bring them back to life, and then sell them for a profit.
Similar to flipping houses is to upgrade a house. This means that the house is in decent living condition already. The investor would move in, live there, upgrade the house to be worth more than it was before, then move after a time. If you combine flipping houses with a skilled real estate agent, you can possibly sell the house much higher than the asking price. You make a decent profit, while the real estate agent also earns a premier commission rate, so it’s win-win on both ends.
3. Multi-family units
This is one of the best real estate strategies with potential great returns. Investing in a building that holds a number of units – like a duplex, triplex or a small apartment building – will cost more at the start, but will generate multiple different sources of income at once.
4. Student rentals
Students are generally not too picky when it comes to places to live. This means that smaller units that wouldn’t generally be acceptable for a family or even a couple will usually be rented easily. It’s a great seasonal investment strategy, however it is possible that you’ll end up short during the summer months.
5. Rent-to-own
Rent-to-own deals allow the investor to still pay down the mortgage of their home, and simultaneously sell it. It is not a strategy for getting wealthy, however it does offer income generation. The biggest thing to remember is that the failure rate for rent-to-own sits around 50 per cent, so it is important to have a backup plan.
6. Buy pre-construction
The first owner of a home or condo will essentially pay a discounted price for the property. The second owner will pay a marked up price. In addition, new constructs are generally being built in growing areas.
As such, investors of real estate can purchase a property before it is completed, and then wait until demand is high before selling it off to the next seller at a highly inflated price. The beneficial part of this strategy is that the investor does not even necessarily need to live in it to reap the benefits of this investment.
7. Long-term & short-term rental
Buying a home exclusively to rent out is a good source of long-term income. It allows the investor to pay off their mortgage on what is usually a second property. After many years, this method will generate income, and is a good strategy for people who will not have much income when they retire.
In the right area, a short-term rental situation can generate more money than a long-term rental set up. People on vacation, or who are living in a place short-term are generally more willing to pay a higher price per day or per month than someone who is planning to live in a place long-term. However, it generally requires more maintenance, care, and active monitoring than other types of real estate strategies.
8. Commercial
Instead of investing in real estate for someone’s home, what about investing in real estate for someone’s business? Although this is a little more difficult to get into – it’s definitely not a strategy for beginners – it can be well worth it when the money starts rolling in. Companies will often do multi-year leases, and bigger companies will pay more for a good location.
9. Wholesaling
In these real estate strategies, the “investor” acts as a middle man, and ultimately doesn’t pay out of pocket for the property. The wholesaler finds a property at a low price, often a property that is distressed or that needs help in some way. They then also find a buyer for that house, sell it to them at a higher price than the seller has asked for, and keep the profit.
10. Real Estate Investment Trust
This is a low risk and fairly high return real estate strategy. In this, many people invest in a property – often something large like a mall or a bunch of homes. It requires minimal amounts of work on behalf of each individual person, and all investors receive a share of any profits that are made. Although beneficial, this is definitely a more complex real estate strategy.
