When it comes to real estate investing, there isn’t a one size fits all strategy. It entirely depends on the type of property, your investment goals, and where you’re at in your investing career. Consider the strategies below to help you determine which type is right for you!

Fix and Flip Properties

A fix and flip is a strategy used when an investor purchases a property in need of updates, TLC or major improvements; the investor renovates the home and then sells the property for a profit. In house flipping the objective is to buy low and sell high. You’ll want to carefully analyze the current market conditions to ensure you’re coming out ahead. In this strategy it’s also important to complete renovations and sell the home as quickly as possible to get the monthly mortgage payments off your hands. In order to make this strategy a powerful investment, you’ll want to make sure you have adequate resources. Making sure you have a trustworthy team of contractors, builders and lenders is key.

If this is the approach you’re planning for then check out our blog post on the most efficient way to finance a fix and flip. 

BRRRR Method

BRRRR stands for buy, rehab, rent, refinance, and repeat. This strategy is similar to fix and flip, however, with fix and flips the intention is to sell, and with BRRRR’s the strategy is to use the property as a rental. Ideally, you would purchase a property and enhance it enough to rent it out for an amount that not only covers the mortgage, but also produces passive income. The third R in BRRRR stands for refinance. Once you’ve made improvements and have secured tenants, you can use cash-out refinancing to obtain capital for a new deal, which explains the fourth R, repeat.

This strategy is best suited for a more seasoned investor, who has experience with investing in rental properties.

House Hacking

House hacking is a way to generate income from the property you live in. This strategy works really well with multifamily properties. You can live in one unit while renting out the other units in order to cover the mortgage and generate income. House hacking is an excellent strategy for a new investor or someone who does not plan on becoming an investor full time.

Accessory Dwelling Units (ADUs) are another form of house hacking, increasing in popularity due to the flexibility and affordability. ADUs are small, additional units built onto an owner's existing property. They must meet specific requirements in order to be considered an ADU.

You can learn more about ADUs and how to acquire financing here!

Buy and Hold Rentals

With the buy and hold strategy you can either invest in a short-term rental or a long-term rental. The difference between these strategies is the amount of time you hold the property for. 

In a short-term buy and hold you would plan to keep the rental for a short period of time, between 1-5 years. Usually during this time the investor would do things to add value for when they sell the property.

A long-term buy and hold strategy is done with the intention of holding onto the property for a long time and renting it out for rental income and appreciation. This is a slow and steady strategy, but can be very successful, especially for properties in desirable locations.

Consider your resources, your personal investment goals, and where you’re at in your investing career to help you decide what type of property and which investment strategy makes the most sense for you!