Real estate investing can be a profitable and exciting way to grow your wealth. However it can be overwhelming for those who are not experienced investors. In this article, we will provide the best real estate investment strategies for beginners, terms, and tips to help you get started.
There are a myriad of real estate investment strategies. One of them is the “buy and hold” strategy. This involves purchasing and holding properties over the course of a long time in order to benefit from appreciation in property while also earning an income that is passive through rental payments. This strategy is a possible protection against inflation since rents can be adjusted to keep up with inflation or exceed it and also provide diversification from other investments.
A fundamental strategy is a real estate investment strategy that entails purchasing fully leased properties, and using a minimal amount leverage. This strategy has lower risk and a more stable cash flow than other strategies, however it also generally has lower potential for capital appreciation.
Value-add investments involve purchasing and renovating properties that are below market value, typically those with management/operational issues, capital constraints, or physical problems. These properties are then re-leased and sold for profits. This strategy is moderate to high risk, however it gives higher returns than core investments and has the potential to earn significant gains.
In addition, you can invest in REITs. These are companies that manage and buy income properties. They also trade publicly on major stock exchanges. This strategy gives investors a diverse exposure to real estate, and a low correlation to other asset classes, but it doesn’t provide direct control or tax benefits like owning a home for yourself.
