Real Estate Investing Strategies

Real Estate Investing Strategies

You’ve heard about people who have been very successful–even become wealthy–investing in real estate. Now, you’d like to get into the game too. Where do you start? How do you go about this? What are the first steps? What are the strategy options?

First, as with any other investment, consult with your financial and tax advisors about whether investing in real estate is right for you and your family. Use these important real estate investing resources to help get you started.

Second, you wouldn’t consider going into business as a CPA or lawyer without the proper education. Real estate education and training is vital for establishing a foundational understanding of investing in real estate as a business. Consider a real estate training and coaching program like LeAnn Riley’s Proven Profit Formula Coaching Program. The course and coaching give you everything you need to get started and to scale as a real estate investor. This is another important real estate investing resource that’s critical to your success.

Consider Which Real Estate Investing Strategies are Right for You.

  1. Buy and Hold Real Estate Investing Strategy. This is one of the most popular real estate investing strategies for beginner investors as well as those who’ve been at this awhile.  Buy and hold is just that:  you invest for the long-term, drawing rental income and building equity while your tenants pay down the mortgage.  Many investors hold on to their properties for many years while experiencing the financial benefits. A real estate investing tip on this strategy: Invest in locations where property appreciation is most likely, where economic developments and growth are anticipated.
    • Buy and Hold Advantages:  1) real estate will always be needed, so if you buy right you can count on a long-term income stream; 2) you can make money in the short term with cash flow generated in the first few months of owning; 3) buy and hold allows you to grow your portfolio over the long term with predictable returns and to add more properties to your portfolio with the same team in place; 4) you can save money by being your own manager, or hire a property management company to handle the property and the tenants.
    • Buy and Hold Disadvantages: 1) this real estate investing strategy does not provide quick cash turn-around…because 2) it’s a long-term commitment; 3) your property may not appreciate at the rate you expected, but remember the tenant is still paying down your principal mortgage balance so equity is accumulating.

“Your advice and knowledge of real estate markets reduced my stress and helped me get a higher return on my investments. I highly recommend LeAnn Riley to expand your portfolio. She’s a winner!”

– PFF STUDENT

  1. Fix and Flip Real Estate Investing Strategy. Here, you invest in a property that needs fixing or upgrades, complete it as quickly as possible, then sell the property at a profit. Real estate investing secret on this strategy: Consider buying a property that needs cosmetic improvements only.  A “quick flip” involves paint, flooring, window coverings, light fixtures etc., but no major construction work.
    • Fix and Flip Advantages:  1) If you buy at a good price, do the work yourself in a month or two, you can make thousands of dollars in profit in a very short time. 2) You can often get affordable financing for both the initial investment and for the rehab, with typical loans, private money loans and hard money.  3) The Fix and Flip real estate investing strategy is a great way for new investors to learn real estate–researching and conducting due diligence on the property, securing funding, project managing by working with contractors to get the fix-up done, putting a property on the market, and finalizing the sale.  4) You will not be required to deal with tenants or any other aspect of renting out the property. 5) Consider buying a property that assures you of a profit. In order to do that you MUST know the numbers and the after repair value (ARV) in the current market.
    • Fix and Flip Disadvantages: 1) If you expect “passive income” from your real estate investment, this strategy is not the route to take.  Whether you do the work yourself or hire help, you will be working hard during the rehab. 2) You will not realize appreciation in the property due to the short turnaround between buying and selling, but you will have forced the increase in value with the improvements you made to the property  3) This real estate investing strategy is not great for brand new investors with little construction or handyman abilities or project management skills, and unless you clearly understand the numbers fix and flip can be riskier.  Also know, you need to factor in the tax implications of a profit.
  1. House Hacking Real Estate Investing Strategy. This is a real estate investing strategy unknown to many beginner investors.  Here, you buy a duplex, triplex or bigger multi-family property, live in one of the units and rent out the others. Or, this can even work if you buy a single family home and rent out the rooms. Real Estate Investing Tip: It’s possible to LIVE FREE in your unit if you plan well.  The income from your rental(s) could cover your mortgage and expenses, allowing you to live in your unit without cost.
    • House Hacking Advantages: 1) Rental income from your tenants should cover your mortgage and expenses while you pay down your mortgage.  2) It’s easier to manage your property while living there. 3) This strategy allows you the opportunity to invest in additional properties, as you have little cost to live in your property and less down payment to get the mortgage when you are owner occupied. 3) You can grow a portfolio quicker, with less money of your own using the house hacking strategy.
    • House Hacking Disadvantages: 1) You are living next to your tenants, so you will be involved with them regularly. 2) This strategy will not provide “passive income”; you will be managing property and tenants ongoing.
  1. BRRRR Real Estate Investing Strategy. BRRRR involves Buy-Rehab-Rent-Refinance-Repeat.  After acquiring the property, you quickly rehab it, select a tenant, rent it out for at least six months, then refinance it to gain capital for your next investment. BRRRR real estate investing secret tip: Always hire an inspector to determine the condition of the property before you buy, so you know exactly what it will take to rehab it.
    • BRRRR Advantages: 1) If you know what you’re doing, this strategy will allow you to build a real estate portfolio fairly quickly. 2) Buying low priced properties and improving them in a short time, you will realize rapid appreciation of your investment. 3) If you are sophisticated in the process and the numbers, you will be able to pull out cash to fund the next deal.
    • BRRRR Disadvantages: 1) No passive income here; you will be working hard on adding the value and then the passive income can work when you move on to the next property. 2) Not appropriate for a newbie investor: too much to know and lots of work to make it happen successfully, that’s why you need a coach or mentor to get this right the first time; it mitigates the risk factor greatly.
  1. Short Term Rental Real Estate Investing Strategy. Most people are familiar with Airbnb or VRBO–renting property for vacation or other uses on a nightly basis. Short term rental real estate investing tip: The old location-location-location real estate rule applies here. It’s wise to acquire property in a desirable vacation location or near an economic center that attracts visiting business people.
    • Short Term Rental Advantages: 1) If you have the right location and pricing, you can make decent money fairly quickly with this type of investment. 2) You can adjust your pricing depending on the season–you can demand higher rents during peaks, and attract guests with lower rates during off-season. 3) It’s your property, and you can use it any time or lend to friends and family.  But, buyer beware, there are tax ramifications on how often you can use it. It’s important to understand all these rules before you invest.
    • Short Term Rental Disadvantages: 1) Some rental regulations may not be as friendly to the property owner; check them out in your location. 2) Because you’re booking on a nightly basis, your occupancy rate can fluctuate a great deal. 3) You need to furnish the property, have all amenities travelers want and decorate to attract higher rents, so there is an upfront cost to handle this.

These are several of the real estate investing strategies to consider.  Others to consider include Wholesaling, REIT (Real Estate Investment Trust) investing and Syndication.  Research thoroughly and seek out the many real estate investing resources online to help you choose the best strategy(ies) for you. Or better yet, hire a coach or mentor to make sure you choose the right strategy that fits your skills and budget for being a successful investor.

If You Would Like to Learn More about Real Estate Investing Strategies with LeAnn Riley Contact Us by Booking a Free Strategy Session Now
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