The Top 10 Real Estate Investing Strategies

^{April 29, 2024 | Reading Time: 6 Minutes}

The good news about real estate investing is that you have options. Don’t worry. REI.School has got you covered.

The strategy you choose to go with will depend on different factors. What’s your tolerance for risk? How much control do you want over your investment? What’s your available down payment? And the list goes on.

Whether you’re a novice or a seasoned pro, there are a variety of real estate investment strategies to choose from.

Now, let’s break down each of these strategies to help you decide which will work best for you. These are just a brief overview of each to get you thinking about the potential opportunities. There are plenty of resources available for you to research in detail strategies that align with your investment goals.

Shameless Plus: Speaking of resources, we have hundreds of videos on our YouTube channel detailing multiple strategies from the very experienced investors helping to guide you in the right direction. In addition, we are including links to books we recommend for each strategy. These are affiliate links so if you make a purchase, we will receive a small (and we mean very small) commission. After all, we’ve got to keep the lights on while providing you with awesome free content.

1. Fix & Flip

Flipping houses involves identifying properties in need of renovation, completing the necessary repairs, and then selling them for a profit. It’s an excellent entry point into real estate investment, providing both income to cover expenses and savings to fuel future ventures. Though it presents its challenges and an upfront financial commitment, successful flipping can yield substantial cash returns when executed effectively.

Recommended Reading: The Book on Estimating Rehab Costs by J Scott

2. Wholesaling

Wholesaling real estate involves serving as the middleman between the investor buying and the homeowner selling. You earn a fee or profit from the margin between what the investor pays and what the homeowner receives.

3. Housing Hacking

House hacking refers to residing in a property while simultaneously generating income from it. This could involve living in a duplex, triplex, fourplex, or a home with extra space that can be rented out. House hacking allows you to reduce your overall expenses. It’s an excellent strategy for getting hands-on experience as a landlord while occupying your rental property. This sets you up to transition the property into a long-term rental when you eventually move out.

4. Live-In Rent

Essentially, you reside in a home that will eventually transition into a rental property. The property serves as both your residence and a future rental unit. However, during your occupancy, you do not rent out the property, a key difference from house hacking.

5. Live-In Flip

The live-in flip strategy involves purchasing a home, residing in it while making renovations, and then waiting several years before selling it at a profit. As per IRS regulations, individuals can potentially exclude up to $250,000 of profit from taxes, while couples can exclude up to $500,000 if they live in the property together.

6. BRRRR

BRRRR stands for buy, rehab, rent, refinance, and repeat. When executed effectively, BRRRR proves to be an excellent method for gradually building a rental portfolio without exhausting your initial capital. You seek out distressed properties that can be acquired below market value. Subsequently, you use short-term financing for the purchase and renovation process. Once the property is renovated, you refinance in to a long-term mortgage. Use your cash out funds to seek out your next project.

7. All-Cash Rental

The all-cash rental strategy snowballs rental income to fuel further growth. Instead of relying on a mortgage, you accumulate savings and acquire rental properties without incurring debt. While using this approach in high-priced markets might pose challenges, it presents an excellent option in more affordable areas.

Recommended Reading: Better than Cash Flow by David Greene

8. Private Lending

Using this approach involves providing short-term loans to investors who are purchasing fix-and-flip properties or rental investments. These loans typically carry high-interest rates and lower loan-to-value (LTV) ratios. While hard money lending has the potential for substantial profits, it also entails risks. For instance, in the event of foreclosure, it’s crucial to ensure proper safeguards are in place to protect your interests.

9. Syndications/Crowdfunding

You combine your capital with other investors to acquire real estate. It offers a means to invest in any of the previously mentioned strategies without having to personally negotiate and put together the deals. Essentially, you partner with general partners or syndicators who handle the acquisition and management of deals on your behalf. Crowdfunding is a newer form of syndication investing where opportunities are marketed through online platforms.

10. Real Estate Investing Trusts (REITs)

REITs operate similarly to mutual funds. However, instead of granting ownership in various bonds or stocks, they offer ownership in multiple commercial properties that generate income. Unlike many other investment approaches, investing in REITs provides a genuinely passive way to engage in real estate investment.

Recommended Reading: The REITs Investing Bible by Alec Rowe

The Top 10 Real Estate Investing Strategies

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