While many people get involved in real estate investing, they don’t all take the same path to success. There are several ways that you can get started and that which may not work for your colleagues may work much better for your circumstances. The most popular strategies for investing in real estate are fixing and flipping, wholesaling, creative real estate investing, and buy and hold.
Fix and Flip
This is the most commonly known of the popular types of real estate investing, particularly because it’s something that can be done relatively quickly. It involves buying a property at a low price, repairing and updating the home, and selling it for significantly more. This requires selling the property at a price that will help you recoup the original investment, the money you spent on renovations and repairs, and still provide a tidy profit.
This is the practice of making a profit by finding real estate deals for investors. In wholesaling, the individual gains a profit by selling the property for a higher price to the investor than paid in the contract with the original seller. While this is similar to flipping houses, there are no repairs that need to be made. In this way, it’s a faster and less costly method of investing in real estate.
Creative Real Estate Investing
This is a much riskier way of investing in real estate, but it can be lucrative with enough knowledge of the market. It involves buying properties without traditional bank loans and without having to provide big down payments. One common way this is done is in buying a depleted property with cash and selling it to another investor at a profit.
Buy and Hold
This involves buying a property, possibly renovating it, and holding onto it for an extended period of time. By renting out the property, you can turn the property into a stable source of income. However, this practice requires intimate knowledge of the market and an ability to predict trends, or you may end up with a property that won’t attract tenants. A vacant property will end up costing you money.
These are four unique and very different investment methods and there’s no rule that says you can’t adopt several of them. You may combine a couple methods to develop your own strategy. As is true with any type of investing practice, you will have to find the method that works best for you.