If you are a beginner real estate investor, you can easily be overwhelmed by the numerous real estate investment strategies available for you to choose from. You have the option to partner with someone, go for REITs, go commercial, buy and hold, flip, and many other options. To help you make your decision easier, here is an evaluation of the top 3 real estate investment strategies for beginners.
- Buy and Hold
Buy and hold is a very popular long term real estate investing strategies among beginner investors. It is a strategy used ideally if the market conditions are getting better and this trend is expected to hold in the coming years. It is an excellent strategy in the current economic conditions because of the rising property prices countrywide.
Buy and hold requires first finding a good property and then considering renting it out for a monthly return. A good buy and hold property should provide a steady passive income and a positive cash flow. You can eventually choose to sell the property and given the rate at which property prices are rising, you are abound to gain significantly on appreciation.
Buy and hold is a real estate investment strategy that achieves effective wealth building since it is a great source of consistent passive income. However, even though buy and hold is a very efficient and profitable investment strategy it has its shortcomings. Market crashes and bad tenants can be very bad for the strategy and you should watch out for them.
- Lease Option
The lease option is one of the most overlooked real estate investment strategies. It has the potential to generate great profits and is perfectly suited to beginner real estate investors. With the lease option, you can rent out property to tenants that have a right to purchase it once the agreed upon lease expires.
Lease option is great for property owners that wish to sell their property but don’t have sufficient equity built up against it. If you have been experiencing difficulties selling your property, lease option is an excellent strategy to help get it off the market. One of the major shortcomings of this strategy is that the renter may fail to purchase the property once the lease expires.
- Short Sales
The short sale real estate strategy is usually used in place of a foreclosure. It helps the seller recover quicker and has a less severe impact than a foreclosure. Buying a short sale means that you get to buy property for much less than it is worth and well below market value.
However, a short sale is usually a very long and tedious process that is impossible to predict how long it will take. A short sale could take as little as a month or as much as a year. If you are planning to buy property quickly, this may not be the ideal strategy.
Buy and hold, short sales, and lease options are all excellent beginner real estate investment options. Ultimately, the choice of real estate strategy will depend on your investment goals, financial situation, and investment portfolio.