Don’t get disturbed by the big words…..when we talk about strategies for real estate investment, all that is under consideration is the different ways we can invest in buying plots or homes. Real estate investment is all about finding a suitable property, buying it, dealing with the ownership formalities and then renting or selling it for profit purposes. It’s a great way to attain financial freedom and earn some extra coins for a rainy day.
Real estate is capital intensive as properties cost quite a bit and is a little difficult to dispose of in a hurry, but is a solid asset all the same that usually multiplies in value, when managed properly. It involves home loans, cash flows from rent, EMI payments and a host of other factors that need to be properly managed. Most cases of property investment failures have to do with improper understanding and management of the investment, resulting in negative cash flow or shortage of liquid funds to keep the investment viable; such a scenario may also result in loss of profit as well as investment.
For this reason, it’s important that we have strategies before going in for real estate investments. However, there is no one particular strategy that guarantees success, so you need to find out first which strategy would be most suitable to your own peculiar particular needs.
Buy and Hold
This is most common type of investment strategy, practiced by the bi as well as small-time players. It involves buying the property for the purpose of holding it for a long period of time. Even if you are going to be using it for rental purposes in the interim period of waiting for capital gain, it is still going to be known as ‘buy and hold’ type of investment.
Property value tends to double every decade or so, thus doubling your investments value; along with this, the rental values also go up with time which means that someone else gets to pay your property loan EMIs, providing you with a property that’s paid by someone else! A great feeling indeed…
This type of strategy doesn’t require too much knowledge of renovations and repairs or maintenance and is pretty much simple to execute.
Fix and Flip
This form of investment involves buying a run-down property, fixing it up and then selling it with a profit. This type of strategy is practiced by professional real estate investors who renovate the building in as short a time as possible, sell it off with a handsome profit and proceed to do another fix and flip. But you need to have a good team of workers and a little experience to be successful in this type of ventures.
There is more risk and capital involved here, but what actually happens here is that an experienced investor buys a parcel of land, develops it and makes multiple housing units and sells them off at a great profit.
This is the easiest method and involves purchasing land and leaving it increase in value. You don’t get any income from it on a regular basis, but do get great capital growth at the end of the day.
Depending on your circumstances, you can choose the strategy that fits your needs.