When people think of investing, they often think of the more typical avenues like rental properties that require consistent management, maintenance, and general upkeep. While these more conventional real estate investment avenues offer a lot of opportunity and substantial profit margins, they aren’t feasible options for every investor.
Fix and Flips
Flipping has become a particularly popular investment approach (cue the HGTV reel) over the last few years. It allows investors to flex their design skills a bit before relisting for a profit. As Diala Taneeb explains, “Fix-and-flips are for investors looking for active, short-term investments to quickly make money. Fix-and-flips are properties that are bought, renovated, and then sold. They are not a get-rich-quick scheme but if done correctly, investors can quickly profit from this strategy.” It’s important to remember inspections though. Flips typically center on cosmetic fixes, not dramatic rewiring, plumbing, etcetera. Thorough research and inspections also help to safeguard your profits.
REITs are particularly popular with investors because of the opportunity to make somewhat hands-free investments in a sector that is usually plagued with renovations and management work. This strategy is also known for its security given that investors purchase a small stake in a variety of properties rather than buying majority control over a single property that could make or break your investment.
Usually, people see no work necessary or move-in ready properties for their limited profit potential. Turnkey rental trends set to change that though. Plus they offer excellent opportunities for more removed or remote investors. As Alex Hemani says, “The turnkey provider determines suitable locations for lucrative investments through thorough research, purchases and upgrades the property, locates and vets tenants, sells to you a property at retail price with a tenant installed and performs ongoing maintenance and management. In some cases, the turnkey provider will even guarantee the rent for a full year.”
Wholesaling requires a different kind of hands-on approach than more conventional strategies, but can be considerably profitable in minimal time. Much like wholesale retail, wholesale real estate investors find underpriced properties, purchase them and then connect with interested buyers who then purchase it at a higher rate.
These transaction cycles take place quickly creating nearly immediate cash flow, but this approach also requires an extensive amount of real estate background and a network to market your properties. As Than Merrill explains, “Before you even start looking for your first wholesale deal, I maintain that you should already have a buyers list in place. You see, as a wholesaler, your sole purpose is to act as the “middleman” between a seller and a buyer. That said, it’s in your best interest to know who you are selling to before you even find a deal.”