Real Estate Investment Strategies“The dawn of the post-credit crisis era has finally arrived. Business and consumer confidence has improved, job growth exceeded expectations, and with it, tenant demand for real estate has increased. Notwithstanding inevitable fluctuations in economic data, the weight of indicators now clearly shows that the US economy is building sufficient momentum for a sustainable expansion… we expect real estate returns to be driven more by strengthening property fundamentals and less by cap rate compression in the coming years… These returns will remain attractive, particularly relative to fixed-income investments.”

 

This is what the research report US Real Estate Strategic Outlook, published by Deutsche Asset & WealthManagement in February 2014, has to say. So, 2014 is definitely a year when the returns on real estate investments are likely to bear good fruit. And with every sector of the property market looking up, the investor today has many options. The key then is to invest strategically for best results.

Best Strategies for Real Estate Investment

Today there is no dearth of options for residential and commercial real estate investment, from coast to coast. While many strategies work well, it is important to choose one that works best for your personal needs and goals. Here’s a look at some strategies to choose from:

Top Real Estate Investment Strategies

Source: Bigger Pockets; The Ultimate Beginner’s Guide to Real Estate Investment

 

  1. Building & Developing: With the surge in demand for housing comes the need to ensure supply. This is the reason why building and development has been gaining traction in recent times. Whether it is the construction of condos and apartment buildings or single family rentals, options for investment in this niche are aplenty. One word of caution, however, is that this is a slightly more risky and financially challenging option than most others.
  2. Buy & Hold: This is possibly the most common investment strategy in the real estate sphere. The strategy basically means that you buy a property and hold on to it for an extended period of time till you are sure you will get the best return on investment (ROI). In the meantime, the property can be used as a rental, to make some extra money while you wait for the market to pick up. In fact, with this strategy, you don’t even need to sell the property to get your ROI. By simply holding on to the property and renting it out, you not only ensure monthly cashflow but also make up for your capital within a short period of time.
  3. Flipping Houses: This again is one of the most popular investment strategies for property lovers. However, it takes some passion from your end because you will be buying a home, fixing it up and then selling it for a profit. It could take over as your day job if you aren’t too careful! The key here is to find discounted property with potential. This means that you buy a home for about 70% of its current value (which is more or less the rule of thumb) and then refurbish it to enhance its value. The only thing that can get you maximum profits in this strategy is speed. You don’t want to hold on to the house for months and incur carrying costs.Real Estate Investment Strategies
  4. Commercial Real Estate: This is certainly not an investment strategy for everyone. If you have the capital to go big, you can choose anything from an office to an industrial complex and from retail to multifamily apartment buildings. This strategy gives you the benefits of monthly rental income as well as the opportunity for wealth building.
  5. Wholesaling Homes: If you have low risk tolerance and limited resources, this could be a good option for you. It is quick, simple and give you a lot of flexibility, apart from the income. For this strategy to work, you need to find great property deals, write the contract to acquire the deal and then sell the contract to another buyer. This means that you don’t actually end up owning any real estate. You simply are the middleman who finds the deals for the right buyers. What you earn is an “assignment fee,” which could be anything between $500 and $5,000 for each contract sold.