What do 90% of the world’s millionaires have in common? They all made their money through real estate investment.
In the last 200 years there is no other industry that is responsible for creating more wealth than real estate.
There are many paths to success in the world of real estate and in this article we review 4 of them.
Table of Contents
1 – Long Term Residential Rentals
Buying a home and then holding (aka buy and hold) has a proven track record over the last 200 years.
Not only do you receive a monthly flow of income, thereby paying the mortgage down, property is the most stable asset and has the best track record in terms of appreciation.
If you buy and hold, you can wait for the market to sky rocket and then sell making big gains.
And even if you miss the low or high mark, you can still hold the property and generate cash flow through renting it out.
Holding real estate for 20 or 30 years is the closet thing you can get to a guaranteed return on investment.
2 – Fix and Flipping
Fix and flipping a home has become a popular way to make money in the last 20 years, it’s so popular there are even dozens of TV shows dedicated to the industry.
Before COVID-19, fix and flipping had one of the hottest years in 2019.
Pandemics don’t last forever, and you maybe able to find distressed or run down properties if you have some savings and can wait out the pandemic.
Location, Location, Location, you’ve heard it before and it’s no different with fix and flips.
Which state or city is hot or cold can change from year to year, heavily impacting your returns.
So it’s important to do your research if you want to be successful in this niche.
The BRRRR Strategy stands for buy, rehab, rent, refinance, repeat, and is a strategy you should learn about if you are going to get into fix and flipping.
3 – Vacation Rentals
Before COVID-19 more than 2 million people stayed in an AirBNB every night.
People have made bundles in the vacation rental industry, it’s also an alternative way to rent out a buy and hold investment time full time.
If you have an empty basement or a spare room and not a big stack of investment capital, this could also be a more realistic way to gain entry into the world of real estate investment.
4 – REITs – Real Estate Investment Trusts
If you are the hands off type, and don’t want to spend all your time fixing up and financing properties, a great option would be REITs.
REITs are like mutual funds but for real estate. Meaning they are more like stocks and can even be publicly traded.
REITs make it possible for an investor to invest in real estate without all the overhead of having to buy, finance, manage or upkeep properties themselves.
These investment vehicles have done remarkably well over the last 20 years, outperforming the S&P index, other indices and the rate of inflation.
They also have a low barrier to entry because you can purchase bite sized shares for less than 10 dollars.
You don’t need to have a million dollars laying around to get into real estate investment. The important thing is that you start today. As they say, the best time to plant a tree was 20 years ago, the second best time is right now.
About the Author
Hard Money Russ writes The Hard Money Blog for The Crescent Lenders’ Website; and is passionate about helping real estate investors attain their dreams in the world of real estate investment. He runs his own AirBnB investment property company and in his spare time he loves to surf, work on his Spanish and spend time with his golden retriever Amy.