Real Estate Investing: 3 Best Strategies for Getting Started!

Real estate investing has lots of advantages over other types of investments. For example, with real estate, you can get in on the ground level without needing to start from scratch or spend tons of money to buy a piece of property. Moreover, as an investor, you can choose properties that fit your financial risk tolerance and time horizon. Investing in real estate can be challenging, but it can also be very rewarding. In this blog post, we’ll take you through 3 of the best strategies for starting in real estate investing!

Click here to learn more about the things you should know before purchasing your first real estate property

What is Real Estate Investing?

Real estate investing is the practice of purchasing, owning, managing, and/or selling real estate for profit. Real estate investors typically purchase properties with the intention of holding them for a short period of time, often no more than three to five years, before reselling them for a profit. In this blog post, I’ll go over the 3 best strategies for someone getting started in Real Estate Investing.

3 Beginner Real Estate Investing Strategies

Wholesaling is a low-cost, high-return strategy that allows you to control properties without having to put up a lot of money. House flipping is a strategy that involves finding houses that need repair and fixing them up. You then sell the house for a profit. Rental property investing is buying properties and renting them out to tenants. For more details, keep reading.

Real Estate Investing Strategy #1: Wholesaling

What is it?

Wholesaling is the process of finding deeply discounted properties and then assigning your purchase contract to another buyer for a fee. 

It’s one of the best ways to get started in real estate investing because it requires little money and no credit, and it also gets you familiar with the process of finding and evaluating deals. 

Once you have a few deals under your belt, you can move on to other types of investing, such as fix-and-flips or buy-and-holds. But wholesaling is a great place to start because it’s a low-risk way to learn the ropes.

How You Make Money

To make money wholesaling, you need to find motivated sellers willing to sell their property at a discount. You then find buyers who are willing to pay more than the price you agreed on with the seller. Once you have a contract in place, you assign the contract to the buyer and collect your fee.

Pros

Wholesaling can be a great option for those with limited capital. You also have the ability to quickly turn properties around and make a profit.

Cons

Wholesaling is, for the most part, a sales job. It can require a lot of time to build that skill. You will also have to find buyers for the properties that have the cash to complete the deal, as most banks won’t finance a property in the kind of shape that would provide a deep discount. 

Real Estate Investing Strategy #2: House Flipping

What is it?

The definition of house flipping is when an investor buys a property, makes renovations, and then sells the property for a profit. Flippers typically try to complete the entire process within a few months so they can quickly move on to their next project.

What Do You Need?

First, you need to have a realistic understanding of the market you’re operating in. What are similar properties selling for? How much can you realistically spend on renovations without over-improving the property? 

Second, you need to have access to financing. You may need to take out a loan or line of credit to cover the costs of purchasing and renovating the property. 

Third, you need to be prepared for the unexpected. There may be unforeseen problems with the property that require additional time and money to fix. 

Finally, you need to have a solid marketing plan in place so you can sell the property quickly and for top dollar.

If you’re thinking about starting a career in real estate investing, house flipping is a great option. It’s important to do your research and understand all aspects of the business before getting started. With proper preparation, house flipping can be a profitable and rewarding experience.

How Do You Make Money

There are 3 basic steps to make money flipping homes:

1. Finding properties at a discount: This is perhaps the most important aspect of making money in any real estate transaction – finding a property at a price below its market value. This can be done by negotiating with sellers who are motivated to sell quickly, working with foreclosures or short sales, or simply being patient and waiting for the right deal to come along.

2. Adding value to the property: Once you have a property under contract, you need to add value to it so that you can sell it for a profit. This can be done through rehabbing the property, adding square footage, or making other improvements.

3. Selling the property: The final step is selling the property for more than you paid for it. This can be done by listing it on the MLS, working with a real estate agent, or marketing it directly to potential buyers.

Pros and Cons

There are pros and cons to every investment, and house flipping is no different. Let’s take a look at some of the pros and cons of flipping houses:

PROS

If done correctly, flipping houses can be very profitable. While there are no guarantees in any investment…if you do your homework and choose your projects wisely, the potential for a high return on your investment is there.

You control the process. When you flip a house, you are in control of the entire process from start to finish. You decide what needs to be done to the property in order to increase its value. This gives you a lot of control over the outcome of your investment.

CONS

Flipping houses can a be risky business. While there is potential for high returns when flipping houses, there is also potential for losses if things don’t go as planned or if the market takes a turn for the worse. Always do your research before moving forward with a flip.

Real Estate Investing Strategy #3: Rental Property (Buy and Hold)

What is Buy and Hold Real Estate Investing?

A rental property is a piece of real estate that is leased out to tenants with the expectation that they will make regular rental payments. The owner of the property may choose to self-manage, or they may hire a property management company to take on the day-to-day tasks of being a landlord.

Rental properties can be a great way to build wealth, but they do come with some risks and responsibilities. Before you dive in, it’s important to do your research and understand what you’re getting into.

Some things you’ll need to consider before buying a rental property:

1. Location: The location of your rental property will play a big role in its success. Look for areas with strong job growth and low crime rates.

2. Maintenance: Be prepared to budget for ongoing maintenance and repairs. Things will break and there will always be something that needs fixing.

3. Tenants: Finding high-quality tenants is key to making your rental property successful. Screen tenants thoroughly and require them to sign a lease agreement.

4. Financing: You’ll need to secure financing before you can purchase a rental property. Work with a lender who has experience with investment properties.

How You Make Money

There are a few different ways that you can make money from rental properties. The most common way is through monthly rent payments from tenants. You can also earn income from things like late fees, pet fees, and utility reimbursements. Another way to make money from rentals is through appreciation. This is when the value of your property goes up over time and you are able to sell it for more than you paid for it. Finally, you can also make money from tax breaks and write-offs that come with owning rental property.

Pros

Rental properties can provide a steady income stream and can appreciate in value over time. They can also be a tangible asset that you can sell if you need to raise cash in a hurry. 

Cons

Rental properties come with a lot of responsibility – you’re responsible for maintaining the property, finding and vetting tenants, and dealing with repairs and other issues that arise. And even though rental properties can appreciate in value, they can also drop in value if the local market turns sour.

Let’s Wrap Up these Real Estate Investing Strategies

Real estate investing can be a great way to make money if you know what strategies to use. If you’ve made it this far, you should now feel more confident about getting started in real estate investing. Start small and build momentum slowly; always remember the golden rule and make sure your costs do not exceed your profits! Research different markets and locations, network with professionals in the industry, and never stop learning! These are all essential components that will help set you up for success over time as a  real estate investor. Good luck on your journey toward becoming a successful real estate investor.

If it ever feels overwhelming, remember: 

“We all learned to walk one step at a time after MANY failures, but we all survived it because we didn’t quit!!!”

-DossExperiment

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