If I have learned anything over the past few years with regard to real estate investing, it is that the market is ever-changing and, in order to be successful, you must be willing to adapt and change in line with the market fluctuations.
That said, what types of strategies are effective for investing in today’s market?
- Short Sales – with record numbers of foreclosures and many banks struggling to remain profitable, the opportunity for short sale transactions is great. Negotiating short sales can be a tedious task; however, if you have patience and persistence, there is a great deal of money to be made. Even better still, the barrier to entry is low. It takes little to no money to start working short sales – one merely needs to educate themselves on the process
- Fix & Flip – if you buy right (at deep discount from a bank or wholesaler), there are profits to be made with the fix & flip approach. You must effectively manage your timeline and construction costs but more important than anything, in my opinion, you must price the property correctly, when the time to sell arrives. The competition for sales is severe, as the number of properties listed for sale is the highest it has been in years. Make sure that you select a price point which is currently moving inventory in your area. In many cases, this is the First Time Homebuyer segment of the market.
- Buy & Hold – this strategy is as old as real estate investing itself and has made more millionaires than any other approach. You know the old saying – buy low, sell high. This very well may be the best opportunity to buy low, that most of us will experience in our lifetime. Knowing the local rental rates is critical. The properties should be cash-flow positive and you must budget for ongoing maintenance and repairs. Knowing local rental rates is critical.
The cuurent market provides opportunities for every type of investor. A beginner, with limited cash may want to get started in short sales or flipping. A hands-off investor, without time to spare, may prefer to partner with a seasoned investor for a fixed return or equity split on buy and hold deals.
Define your goals (figures and timelines) and make investment decisions accordingly. Determine a desired rate of return and work towards finding investment vehicle which will acheive that result.