Real estate investment strategies that you need to know
Investment in real estate is cited as one of the best options. Compared to other investment alternatives in the market e.g., stocks and bonds, it is less volatile to shocks in the economy, appreciates over time (given the right market conditions) and has a long shelf-life.
To build your portfolio and enjoy all the benefits that come with real estate, you need to use the right strategy. The team at Sapphire Capital Investment offers some that you can use.
Rental property offers property owners a stable and passive source of income. However, there is much that goes to selecting the right investment property to sink your resources in. The ideal rental property is one that is located in a vibrant market, the demand for rental spaces is moderate to high and is situated in a neighborhood with adequate services and amenities.
The quality of the tenant on your property will also determine the viability of your investment in property. Once you have advertised your property, make sure to implement a comprehensive tenant screening and selection process. Only choose a tenant who has good references and who passes credit, income history and criminal background checks.
Buy and hold
This strategy is known in other circles as rehabbing. As stated earlier, property has the characteristic of appreciating over time. However, it has a disclaimer attached to it. Due to an improvement in the economic situation, introduction of some new policies or any other value driver, the property is bound to appreciate over time.
The idea here is buying a property in a young market and renovating the space. At the time, you will rent out the property and wait for the economic situation to improve. You will be enjoying the benefits of steady income as the price of your property increases.
Once the time comes to sell, you can legally avoid capital gains by choosing to do a 1031 exchange. For more information on the same, contact our experienced and qualified team.
The difference between this strategy and the one earlier is the time limit. In flipping, an investor purchases property, performs renovations on the property that will improve on its value and immediately putting it on the market. The holding period is significantly reduced.
Investors have expressed their concern about this strategy, claiming it has more characteristics of a get-rich-quick scheme and less of an investment strategy. But consider the research and the identification of the ideal market to purchase property. Flipping properties is not a matter of speculation but of deduction backed by research.
Real estate investment trusts (REITs)
This is one of the new kids on the blocks when it comes to real estate investment. In REITS, we follow the same pattern as stocks. They offer high liquidity that it often not attributed to real estate. They are a great source of reliable income as you receive dividends on a regular basis.
REIT companies invest in a wide range of property assets from apartments to office blocks to single-family homes.
BRRR Investing Method
This is a long-term investment strategy that constitutes buying an undervalued property, rehabbing it, renting it out to tenants, use the same for refinancing and repeating the process. Hence the acronym BRRR.
It is a tried and tested process that has withstood the test of time. With better experience in the property market, the investor is able to make better decisions when it comes to the type of property, renovations, the type of tenants as well as contracts on materials and labor.
There are no two investors who can use the same strategy to invest in real estate. You will need a custom strategy that takes into consideration your financial goals as well as needs, be they short-term of long-term. Call upon the team at Sapphire Capital Investment to streamline the process for you.