Real Estate Investing Strategies

As a brand new or seasoned real estate investor, having a solid investment strategy is always helpful before making any moves. Of course, there are many ways to invest in real estate, and your best process depends on your individual goals and circumstances. But regardless of your specific goals, some basic investment strategies can help you succeed in real estate.

Core strategies in successful real estate investing include:

1) Buy And Hold

Following a buy-and-hold strategy is straightforward and one that millions of people utilize in real estate investing. This approach is generally more of a long-term play, where you purchase property and then hold it in your real estate portfolio for years or even decades. With this strategy, investors count on the appreciation to grow equity over time.

2) Fix And Flip

This is a more active real estate investing strategy where you purchase a property, make improvements or repairs, and then sell it for a profit. Fix and flip investors generally look for properties that are undervalued and in need of some work. Then, by fixing and selling them, they can earn a sizable return on their investment. As you might imagine, this benefits homebuyers searching for a turnkey home with recent upgrades and renovations already completed.

3) Rent And Hold

A rent-and-hold strategy is a great way to generate consistent income from your real estate investments. With this strategy, you purchase a property and rent or lease it out to residents. The rental income can help you cover the mortgage payments and other expenses associated with owning the property. And over time, the property will likely appreciate, providing you with even more equity when you decide it’s time to sell. Some real estate investors build their entire portfolios following this investment approach.

4) Wholesaling

Wholesaling is a real estate investing strategy where you find undervalued properties and quickly sell them to another investor at a profit. Wholesaling is generally a shorter-term play as you do not usually own the property. But wholesaling can be a great way to earn quick profits in the real estate market.

Often, experienced real estate investors will utilize a combination of these strategies to achieve their goals. For example, you could buy and hold a property for the long term while renting it out to generate income. Or you could fix and flip a property and wholesale properties on the side.

Create A Strategy That Works For You

With all these approaches to real estate investing, finding a suitable strategy for your goals, risk tolerance, and financial situation is essential. Other factors include market conditions, risk tolerance, financing, and what your credit score will allow you to accomplish.

But there are some commonalities among all successful real estate strategies. There are three key elements that every real estate investment strategy must have to be successful.

Let’s discuss each of these critical elements:

1. A Clear Understanding Of The Market – You need to know where you are in the real estate investing cycle. So the first step in any investment strategy is understanding the market where you’ll be investing. That means having a firm grasp on local economic conditions, demographics, housing trends, and anything else that could impact your market’s demand for rental properties. While not always the case, many investors tend to focus on familiar markets, like the town where they live. Doing so gives investors a better feel for the neighborhoods where they invest and the people they serve.
2. A Plan To Return A Profit – The goal of any investment strategy is to make money. So it would help if you planned to generate a return on your investment. That could mean selling the property for a profit or generating rental income from residents monthly. But whatever your plan is, make sure it’s realistic, and you have a clear path to create a return on your investment.
3. A Way To Minimize Risk – You can’t afford to wipe out your finances if your real estate investing plan turns adverse. So the third and final element of a successful real estate investment strategy is finding ways to reduce the risks associated with your investment. That means diversifying your portfolio, solidly understanding the legal aspects of real estate investing, and preparing for the worst-case scenario.
4. A Backup Plan If Things Go Wrong – Even the best-laid plans can go awry. So it would help to have a backup plan when things are unexpected. That could mean having extra cash to cover unexpected repairs or vacancies. Or it could mean having a Plan B to sell the property if you can’t find residents. Whatever your backup plan, having a contingency plan to protect your investment is a defensive move.

By entering into real estate investments with open eyes and a solid strategy, you’ll have the position to succeed in the long run.

Investing In Growth Communities

It’s no secret that lately, people have been on the move. And Charlotte, NC, is one of the fastest-growing cities in the country. For real estate investors, this demand opens up a wealth of opportunities.

Since 2010, Charlotte’s population has grown by more than 12%. And it’s projected to grow another 9% by 2030. With abundant employment opportunities, a low cost of living, and a mild climate, it’s no wonder people are flocking to Queen City.

For investors, this population growth means an increased demand for rental properties. So, investing in Charlotte’s growth communities is an excellent option if you’re looking for a real estate investment strategy with high potential returns.

Regardless of your chosen strategy, real estate investing is about understanding your market, minimizing risk, and having a clear plan to generate a return on investment. With these three critical elements in place, you’ll be well on your way to success.

If you need help finding investment property opportunities in Charlotte, reach out to Henderson Investment Group! We can help you find, acquire, renovate, and manage your rental property!