Real estate stands to be one of the best assets that you can own in your lifetime. As the demand for real estate increases, so does its value, making it an excellent option where you can invest your hard-earned money into. For you to get the best out of your money and your investment, it is important for you to employ a well-thought-out strategic plan for your real estate investment. Doing so will help you ensure that your money won’t end up on real property that eventually turns lemon.
But before learning about these investment strategies, it’s best to have a refresher on the real estate market first. Wherever you are in the world, most of these concepts generally apply, and as long as you get the gist, then there’s a high chance you’ll do well in real estate investing. Click here for a quick refresher on what you need to know about real estate. What are these investment strategies? Continue reading to find out.
1. Fix-And-Flip Investment Plan
A majority of the real estate investors would prefer to purchase a property that needs less fixing. For most, they want the property to be as perfect as it can be before the final sale price is paid. But you can go the opposite way, and this is essentially the essence of a fix-and-flip investment plan.
Instead of purchasing the perfect property, go ahead and invest in real estate options that need a lot of fixing. These properties are often sold at a meager price. Hence, you are going way below the budget that you have intended. The remainder of your budget is what you can use to flip the property and turn it into a perfect home before reselling it.
With these new renovations, the houses look newer and even fresher. You can then put a higher price tag on these houses and earn so much more income from reselling them.
2. Buy-And-Hold Investment Plan
A buy-and-hold investment is a process whereby you purchase a property today, hold it for a long time, and then use it later on. Instead of using it immediately after your purchase, you keep it on hold first for a couple of years to allow the value of the property to double or increase even more. After five to seven years, when the price of the property is lucrative enough, this is when you start opening it up to the public for income to start coming in. Many opt to have these properties rented out, while others resell these homes for so much more than the price they have initially bought it for.
This investment scheme isn’t just for anybody, though. Remember that for a few years, the property will be stagnant and won’t be earning an income. Hence, this investment strategy is perfect to those who have other homes on their investment portfolio to earn an income from, or those who have no intention of leaving their jobs or businesses for them to still earn an income while the real property is on hold.
3. House Hacking
House hacking is the perfect real estate investing strategy for those who are still starting out in the business. In a nutshell, this refers to the process of continually living in the home that is also earning rental income at the same time. For example, you have extra space in the basement, which you have converted into a studio apartment for rent. Or there is that shed in your garden that you have converted into a guesthouse. Perhaps, you may even still be living in a rental home with extra rooms that you can have rented out as well.
This model is no stranger to homes that have extra rooms, or for families that are currently paying for high rent and need help to pay for the mortgage or rent of these spaces. The great thing about it is that while you are paying for your rental or mortgage, too, you are learning the basics of real estate investing. You may even be earning extra income in the process, on top of the allocated amount to share in the mortgage or rental payments of the whole house or apartment complex.
This fourth investment plan is also one of the most popular and doable investment strategies, particularly for homeowners who are sitting on a huge piece of land. If you have no plans of utilizing the rest of your property for personal purposes, what you can do is to split the current property in two: one is for your personal use, and the other is for commercial purposes.
On one half, you have your home. On the other half, however, you develop it to build a house or an apartment complex, depending on the size of the property.
Investing in real property is an excellent way for you to earn a little bit more extra, and eventually achieve financial freedom. Many have now left their day jobs because the income that they earn from their real property investments is more than enough to support them through their needs and even their wants. But like any other investment, nothing ever comes easy, and you have to bring with you a well-defined plan and strategy.