Real Estate Investing Strategies

1. Buy and Rent

When you buy and rent real estate, you buy properties you can rent to tenants and manage either yourself or hire a property management company to do for you. Most real estate investors purchase single-family properties, condos, or townhomes for rental property. It’s important to do your research in the area to see what most renters prefer and to make sure there’s enough profit in the amount of rent you can charge to earn a positive cash flow.


You can also use the BRRRR method to buy and rent. With this method, you buy an undervalued property (B), rehab the property to make it livable so you can charge at least the market rent (R), rent the property to tenants (R), refinance the property when you have equity in it (R) and repeat the process using the equity you just earned (R).
If buying a separate property to rent out and manage is too overwhelming, house hacking is a great strategy for beginner investors. Instead of purchasing a separate property, you buy a multi-family unit (1-4 units). You live in one unit and rent out the remaining units to tenants, using the cash flow to pay your mortgage payments and possibly earn a profit.

Who Benefits

If you have the patients to handle tenants and the ability to maintain and fix properties whenever it’s needed, you can benefit from the buy and rent strategy. You could also benefit from it if you have the extra funds to hire a property management company, as this allows you to invest anywhere in the country, not just in your local area.

Pros and Cons

Pros:

  • May provide monthly rental income
  • You can leverage your investment with financing
  • There may be tax advantages

Cons:

  • It can be hard to manage tenants
  • You are responsible for anything that happens in the home

2. Buy and Hold

The buy and hold strategy is good if you don’t want to be a landlord but want to enjoy a property’s appreciation. You buy undervalued properties, fix them up just enough to be able to rent them out, then market the property for rent.

You can buy and hold for the short-term or long-term, depending on your investment strategies. For example, many real estate investors buy properties, fix them up and earn capital appreciation. Then, when they sell the property, rather than taking in cash, they reinvest it in another investment property, using the 1031 exchange rule to avoid paying taxes on the capital gains.

Who Benefits

The buy and hold strategy is good for real estate investors who don’t have a lot of capital upfront but who can fix up properties, making them worth more, and allowing them to earn rental income and capital gains when they sell the property. It also works best for investors who have a short-term real estate investing strategy and want to continually reinvest funds in other properties to increase their capital gains.

Pros and Cons

Pros:

  • You can save money upfront by buying undervalued properties
  • You can have a short-term or long-term investment strategy
  • You can use the rental income earned to add to your portfolio

Cons:

  • You must be in the investment for the long-term for it to work
  • It could take a long time to earn capital appreciation

3. Wholesaling

If you have the skills to find undervalued properties and have a network of real estate investors ready to buy, real estate wholesaling can be a great investment strategy. It’s not a form of passive income, and you must be able to network on both sides – buying and selling to make it work.

Wholesaling real estate means you enter a contract to buy a property but immediately assign the contract to a buyer you’ve secured. The contract you sign with your buyer will be for the property price plus your premium for finding the property.

As a real estate wholesaler, you are the middle man in the transaction. You charge a ‘finder’s fee’ for finding the property for the real estate investors that don’t have the time to find them.

Who Benefits

Wholesaling real estate works best for those who have great knowledge about real estate and how to find it but don’t want the hassle of owning real estate themselves. You benefit from making a profit but don’t worry about owning real estate yourself.

Pros and Cons

Pros:

  • You can exercise your real estate knowledge without owning real estate yourself
  • You don’t need a lot of capital to start
  • It doesn’t take long to earn your money

Cons:

  • You have a short timeline to flip the contract to make money
  • You could get stuck with a contract that you have to honor or risk breaking if you can’t find buyers

4. Flip and Sell

The flip and sell strategy requires you to buy an undervalued property, fix it, and flip it. The fix and flip strategy can work with a home you buy strictly for that purpose, or you could do a live-in flip where you buy the property, live in it while you fix it up, and then flip it.


Either way, your goal is to fix the property up to increase its value and earn capital gains when you sell it. It’s another version of the buy low, sell high investment strategy.

Who Benefits

To make the flip and sell strategy work, you must have enough capital to buy the property and the ability to fix it either yourself or by hiring contractors to do the work for you. In the traditional fix and flip strategy, you sell the property within six months of buying it, so you must also be able to act fast.

Pros and Cons

Pros:

  • You could potentially make money quickly if you flip and sell within a few months
  • You don’t have to hold onto real estate long-term and manage it
  • You can farm the work out to contractors if there’s enough room in the price

Cons:

  • It takes a lot of physical work; it’s not a passive strategy
  • You need a large network of real estate professionals to make it work

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