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Are you looking for the perfect real estate investment strategies to diversify your portfolio? To pick the right strategy, you need to consider your goals, look at your finances, determine your threshold for risk, and choose a method that fits your lifestyle. 

Learn more about choosing the right real estate investment strategy in this guide with step-by-step instructions, examples, and examples of various real estate investments.

How to Choose the Right Real Estate Investment Strategy

Choosing the right real estate investment strategy can be challenging because there are so many options. So, here are a few steps you can take to determine which is right for you. 

  1. Consider your investment goals. 
  2. Look at your finances. 
  3. Assess your risk threshold. 
  4. Decide how much you can afford to spend. 
  5. Think about how much time you want to spend on your real estate investments. 
  6. Consider your knowledge and skills. 
  7. Choose a strategy that fits your goals, budget, and expertise.

11 Real Estate Investment Strategies

There are numerous real estate investment strategies you can use. To learn more about each, take a look at the list below. 

1. Fix and Flip 

Fix and flip investing is when an investor buys a distressed property, fixes it, and sells it for a profit. To fix and flip homes successfully, you need to acquire properties at a discount in desirable areas where houses are selling quickly. 

2. All Cash 

All-cash investing means, you purchase all of your properties without a mortgage. This can be a great strategy if you have money saved. You make more on your investment because you are not paying interest on mortgage loans. 

3. Trade Up

When you trade up, you purchase cheap homes and trade them with homeowners looking to move. Trading up can take time because you have to find the right deals. You can often locate people willing to trade real estate on Craigslist. However, you have to look out for con artists. 

4. Live-In Flip

Some investors buy a home and live in it while fixing it up to resell to cut their overhead. Choosing this method of real estate investing is a good idea for people who cannot afford to finance a second home. However, the downside is you must move when finding a buyer. 

Live in and flip

5. Syndication

Real estate syndication is when a group of people pools their money together to invest in real estate. It is a great option for investors with less money to spend on buying properties but who do not want to go into debt.

6. REITs

Real Estate Investment Trusts (REITs) are securities that allow people to invest in a diversified portfolio of properties. REITs have to distribute 90 percent of their taxable income, which is great for shareholders who want a routine income from their investments. 

REIT investing

7. Buy and Hold

Buying properties and holding them or leasing them out is an excellent investment strategy. If you are financing your investments, you can have someone else paying for the mortgage as long as you have it rented. With a couple of rental properties, when you reach retirement age, you can sell the properties or live off your rental income. 

Buy and hold is also popular with pieces of land. Investors will often buy large tracts of land in up-and-coming towns and sell them down the road when the land increases in value. 

8. Live-In and Lease

When you live in and lease property, you rent the rooms out in your home, or you can also add a tiny home to your existing property. These are great ways to generate rental income without buying another home. 

Live in and lease

9. Wholesaling

Real estate wholesaling is the practice of finding real estate deals and selling the contract or right to buy the property to investors. You do not need a real estate license to assign contracts in many states. 

However, to successfully wholesale property, you need to have a group of investors ready to buy. Otherwise, you may lose your earnest money. 

10. Long-Term Rental Properties

Long-term rentals are properties you lease to tenants. When buying homes to rent, you need to ensure they are in a desirable area and ensure that your overhead is less than the market rent in the area using tools like the gross rent multiplier

You can implement a long-term rental strategy by paying cash for properties or by financing them. Remember that if you mortgage your rental homes, you will likely not make more than a few hundred dollars each month until the home loan is paid. 

11. Short-Term Rentals / Airbnb

Airbnb properties are a popular way for people to invest in real estate and enjoy a second home. You can rent the property during peak seasons and enjoy it during times when fewer people are traveling. 

Airbnb rentals

You can earn more than a traditional long-term lease if you own a popular property. However, if your property sits vacant most of the year, your overhead may be higher. 

Final Advice on Real Estate Investment Strategies

There are numerous real estate investment strategies you can follow. You can also combine more than one investment type to increase your diversification and protect yourself from bad investments.

If you are new to real estate investing, think about finding an experienced mentor who can help you learn the industry. 

For more valuable information, take a look at the other posts here on topics like how to build an investment portfolio with high cash flow

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Written By:
Amy Gilmore
Amy has over ten years of experience as a title company branch manager and closing trainer. Her escrow book of business includes national lenders, real estate wholesalers, investors, property developers, and top-selling realtors. Amy is passionate about teaching the benefits of investing in property and mentoring others in the real estate industry.
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