Real Estate Investing Strategies That Makes You Money Real estate investing using the buy and hold strategy is a great way to cultivate wealth for the long term.
Many millionaires in the past have made majority of their wealth through this strategy.
It is very important to know some parameters before diving into this type of investing strategy.
Here are the 6 valuable strategies every real estate investor should know.
1.
You should determine the town you are investing have the economic conditions to buy and hold real estate - The best time for this strategy is when the housing markets are depressed and there is plenty of room for home values to increase or if the town has major growth indications that it will increase in value.
When the housing market is booming or if it's at the peak of the bubble, you may get stuck with a property that is valued near the top of the price range and has nowhere else to go but down.
Fortunately real estate is a forgiving type of investment, if you over paid for a property, you may just have to ride out until the market takes another upturn.
2.
Decide on the length of time you want to hold the property - You need to figure out how long you want to apply this strategy before you start.
Real estate prices generally fluctuate every 10-12 years or so.
Know where you are in the cycle and make your decision on implementation with this in mind.
Always do research in your town by looking at statistics for the last 10-20 years.
The longer you hold it, the less risk you have with market cycles.
3.
Determine your profit goals (and loss limits) - You need to know what prices will get you out of the deal.
These prices will trigger the sale of the property when they are hit.
Don't get greedy if the prices run up and don't ride the prices down to rock bottom either.
Setting these limits will allow you to either meet your goals or take an acceptable loss.
Always buy properties that cash flow.
This means that the income exceeds the expenses so that at the every month, there is more left over for you.
If you apply this strategy right from the beginning, this may help buffer some unexpected expenses that might come up during the holding period.
This way even if market takes longer to recover, you will always be on the positive side.
4.
Purchase your investment property below market value if possible - If you buy at the top of the market, there's no room for the property to appreciate.
Buying foreclosed property that needs some work is the best strategy.
This solution allows room for the prices to go up and for you to lock in profits.
It is important that you buy in towns that have great market appreciation potential, therefore even if you purchase the property at market value, you can still make a sizable profit.
5.
Revisit your plan and adjust as necessary - You're making a huge mistake if you think you can buy and hold real estate and forget about it.
You should check on property values every six months or so to anticipate a change in the housing market.
If required, you can put your selling plan into action and realize your profit or acceptable loss.
This will mean that you set aside time to communicate with your property manager and/or Property Management Company.
6.
Sell the property when your buy and hold goals or loss limits are met - By sticking to your plan, there will be no temptation to hang onto a property too long.
You will also avoid losses that were larger than expected because you got out of the property according to your plan.
Many millionaires in the past have made majority of their wealth through this strategy.
It is very important to know some parameters before diving into this type of investing strategy.
Here are the 6 valuable strategies every real estate investor should know.
1.
You should determine the town you are investing have the economic conditions to buy and hold real estate - The best time for this strategy is when the housing markets are depressed and there is plenty of room for home values to increase or if the town has major growth indications that it will increase in value.
When the housing market is booming or if it's at the peak of the bubble, you may get stuck with a property that is valued near the top of the price range and has nowhere else to go but down.
Fortunately real estate is a forgiving type of investment, if you over paid for a property, you may just have to ride out until the market takes another upturn.
2.
Decide on the length of time you want to hold the property - You need to figure out how long you want to apply this strategy before you start.
Real estate prices generally fluctuate every 10-12 years or so.
Know where you are in the cycle and make your decision on implementation with this in mind.
Always do research in your town by looking at statistics for the last 10-20 years.
The longer you hold it, the less risk you have with market cycles.
3.
Determine your profit goals (and loss limits) - You need to know what prices will get you out of the deal.
These prices will trigger the sale of the property when they are hit.
Don't get greedy if the prices run up and don't ride the prices down to rock bottom either.
Setting these limits will allow you to either meet your goals or take an acceptable loss.
Always buy properties that cash flow.
This means that the income exceeds the expenses so that at the every month, there is more left over for you.
If you apply this strategy right from the beginning, this may help buffer some unexpected expenses that might come up during the holding period.
This way even if market takes longer to recover, you will always be on the positive side.
4.
Purchase your investment property below market value if possible - If you buy at the top of the market, there's no room for the property to appreciate.
Buying foreclosed property that needs some work is the best strategy.
This solution allows room for the prices to go up and for you to lock in profits.
It is important that you buy in towns that have great market appreciation potential, therefore even if you purchase the property at market value, you can still make a sizable profit.
5.
Revisit your plan and adjust as necessary - You're making a huge mistake if you think you can buy and hold real estate and forget about it.
You should check on property values every six months or so to anticipate a change in the housing market.
If required, you can put your selling plan into action and realize your profit or acceptable loss.
This will mean that you set aside time to communicate with your property manager and/or Property Management Company.
6.
Sell the property when your buy and hold goals or loss limits are met - By sticking to your plan, there will be no temptation to hang onto a property too long.
You will also avoid losses that were larger than expected because you got out of the property according to your plan.