Here Are Five of The Best Real Estate Strategies

Ever wonder what the majority of the wealthiest people in the world have in common? They all own real estate.  But how do you successful invest in real estate? And, what are the best best real estate strategies to use?

Real estate can come in all shapes and sizes (no pun intended). The strategies used vary greatly, but all that means is that you can choose one that fits your preferences and skills best.  All of strategies in this article are designed for more sophisticated investors, but what makes them “best” is they’ve all been tried and are profitable.

This article outlines some of the most profitable/best real estate methods out there. Let’s dive in!

1. Short-Term Rental Arbitrage

This is when you rent an apartment and then list it (with the owner’s permission) on a website like Airbnb, VRBO or HomeAway.

Short-term rentals (STRs) in themselves are incredibly profitable with guests generally paying over $100 for a single night stay. Multiply that $100 by 30 days in a month, and you have a nice $3,000, which is far more than what a long-term rental would profit. Of course, that means you would have to be booked every single night; however, it’s pretty easy to see just how lucrative STRs can be. Now take homeownership costs out of the equation; the results are an easier real estate strategy for you.

2. The BRRRR Method

The Buy Rehab Rent Refinance Repeat method is a common one used by multi-millionaire real estate investors.

It works by buying a property that is in subpar conditions but in a good neighborhood with cash or equivalent, and rehabbing it to get it to look great. This includes adding bathrooms or bedrooms where possible, renting it out for an appropriate market rent price, refinancing it to pull your original cash out, and repeating by using that same cash to buy another property, rehab it, rent it, refinance and so on.

This strategy increases the velocity of your money incredibly by using the same cash to buy multiple properties. When you refinance the property, you get a mortgage that is completely covered by rent (you want a surplus of rent money, so you’re profiting). When you refinance, the bank will typically give you about 70-75% of the home market price. This part is very important. It means that you want to make sure you’re buying low enough and doing the right rehab to get the market value of the home to be at least 30% more than what you’re all in the property corn (purchase price Andy rehab costs).

When done correctly, this strategy can build your wealth incredibly fast.

3. Apartment Complex Syndications

This strategy is when one investor pools money from multiple investors to have one big lump sum to be able to buy an apartment complex.

In these deals, you can choose to be an active or passive investor. If you were active, it might mean you are investing your time by scouting deals, finalizing new contracts, or running numbers while also potentially investing your money. If you are passive, it just means you are investing your money into the deal for a return.

These sorts of deals happen between experienced investors who don’t have the capital to invest. That said, if you’re a newbie who 2nts to learn more, try networking with some experienced investors and offerings up your time to help so then, in turn, you get to learn from them.

4. Mobile Home Parks

Buying a mobile home park actually means you are buying the land that the mobile homes sit on, not the actual homes. The beauty of this? You don’t actually have to upkeep the home like you would with a normal multi-family or apartment complex. Instead, you have to upkeep the land plus any common area so there might be.

Mobile home parks are also often to be one of the best recession proof investments because it’s very costly for the tenants to move out (they have to pay to move their home, remove any hookups to water and electric and pay to get into another park). They are also relatively cheap for the tenants to live there.

Finding a loan for a mobile home park may be harder than a multi-family, but it isn’t possible. There are plenty of ways to get creative with funding these deals.

5. Wholesaling

The fifth item on the list of best real estate strategies is wholesaling. This strategy is when you, the wholesaler, find deals and sells them instead of putting them on the market. The wholesaler earns money when’s they get a deal from the seller at a low price and sell it to an investor at a higher price.

Some wholesalers have a huge network of investors who know they are wholesalers so if they want to find a deal or sell a property, they go to them.

Other wholesalers work to find deals by scouring the streets and finding owners who may be interested in selling.

Regardless, this method can snowball profits fast if you are churning deals. It’s a low barrier to entry as well since you really only need to invest your time and energy, no capital. For more information see this post: Wholesale Real Estate: The Ambitious Agent’s Ultimate Guide to Winning Ethically.

6. BONUS IDEA: Own A Ton Of Fractional Real Estate

Finance is constantly evolving, so one part of a toolkit of best investing strategies is to own a ton of shares in different properties.  In the past this was best done through holding Real Estate Investment Trusts (REITS) or by raising the hundreds of thousands of dollars of capital needed to purchase houses in different markets. However, due to regulatory and social change, there are now a number of good businesses that help investors purchase partial ownership of real estate. Here are two legitimate companies that are doing this:

Ark7: This is an interesting little start up.  They basically buy houses and commercial property and issue shares in the properties. The company handles all the administration and rental payments.  You get a portion of the rent based on how much of the property you own.  You can read our review of them here, and sign up here if you like the idea.

Another interesting company in the fractional ownership space is Fintor.  It works on a similar model to Ark7.  You buy fractional ownership in a single family home, and the app issues you monthly dividends.  The company is a bit less established than ARK7, but both are good possibilities if small investors are interested in geographically targeted real estate.  You can sign up for Fintor here.

There are a number of other fractional ownership such as Landa and Fundrise, but Ark7 and Fintor are good for starters.

Final Thoughts

Real estate has been proven to be one of the strongest income-producing investments by the millionaires who partake. If you are looking to get started in real estate,  be sure to do your research and choose your investment strategy wisely. The strategies listed above are great options for those looking to get the most out of their time and money.