Austin Real Estate Investing: Here are 4 Timeless Strategies to Use
January 5, 2018 | Badmin
Here are 4 Timeless Strategies to Use in Austin Real Estate Investing
For new or old investors alike, moving into the business of buying, selling, and renting real estate may seem pretty ambitious.
But like any other area of personal finance expertise, real estate investing boils down to some easy to follow basics. With the right strategies, patience, due diligence and a willingness to learn, it’s a discipline that can help you make leaps and strides on the path to financial independence.
STRATEGIES FOR REAL ESTATE INVESTING
Today’s infographic comes to us from Offer Climb and it dives into four timeless real estate investing strategies worth knowing.
Whether you aim to do a quick “lipstick” flip or you’d prefer to generate passive income over time, learn more about each one and resources needed to execute on each strategy.
Austin Real Estate Investing: Here are 4 Timeless Strategies to Use (continued .. )
Although buying and holding is the most common and traditional strategy used for real estate investing, there is actually a variety of different strategies used. Some of these are simple and can be executed in just days, while others can be used on an ongoing basis to create long-term value.
Seasoned investing veterans will tell you that the US real estate market is still one of the best investment avenues you can go into. However, most people who are just getting into investing are still reluctant because of real estate’s undeserved bad reputation, brought by the housing bubble and subprime mortgage crisis a few years back.
Warren Buffet once said that “Risk comes from not knowing what you’re doing.”, and another quote from him goes “be fearful when others are greedy, and greedy when others are fearful.” There is no doubt that in the previous real estate bubble, there were a few who got out richer while others were scrambling to cut losses, simply because they knew what they were doing.
Markets periodically go through “busts” or crash because prices can’t go on rising rapidly forever. However, compared to, say the stock market, the real estate market’s boom-and-bust cycle will go on for much longer, and that this may be the reason why some investors are usually caught unaware when things go awry.
They get lulled into complacency, thinking that the market would keep on growing at the same pace for years to come, and at the same time they get so caught up in the hype that they fail to see, and sometime deliberately ignore, the indicators of an impending bust.
This is why you should not be afraid of getting into real estate today, even if you are an inexperienced investor. The Chinese have a proverb that goes “The best time to plant a tree was 20 years ago the second best time is now”, which shows how critical a factor time is in investing. However, you do have to proceed armed with as much knowledge as possible, and not just follow what the latest strategy everyone is doing.
Now if you’re someone who’s already decided to get into real estate investing, but don’t know where to begin, then you’re probably looking for something actionable to get the ball rolling. You also need something that’s easy-to-understand. Baby steps is the way to go, take only small, well-calculated risks at first and never, ever blow your capital with a “get rich quick” goal in mind.
So it goes without saying that before you begin, you should have already done your homework diligently. If you did, then you should already have the following basic resources that you’ll be needing for almost all of the strategies that you’ll be trying out: motivated seller/internet leads, access to MLS (multiple listing service), a title company, a contractor, an LLC or business entity, and of course, funding.
REAL ESTATE INVESTMENT STRATEGIES EXPLAINED AUSTIN REAL ESTATE INVESTING: HERE ARE 4 TIMELESS STRATEGIES
Now it’s time to talk strategy. Most strategies that you’ll come across will fall under, or just be a variation of the following:
- Buy & Hold – this is where you purchase property mainly for the purpose of renting it out. Buying single-family homes for Airbnb or long-term rental, or commercial buildings for business are forms of buy-and-hold. This usually requires a sizeable initial investment, but there is also a way to fund this strategy using refinancing.
- Flips – this is a good way to make quick money by fixing up a property, usually residential ones that only require cosmetic improvements, and then reselling it.
- REITs and Lending – in the most basic sense, this is a kind of passive investment in the real estate market where a number of investors put their money in a fund so that the amount becomes big enough to purchase properties. Another way would be to lend your money to someone who is having difficulty getting a loan from the bank.
- Wholesaling – this is similar to flipping, but basically only involves finding a buyer for a seller and taking a percentage off the sale.
To narrow this down further, Houston real estate veterans OfferClimb has recently published an info-graphic revealing their top 4 strategies that new investors can use as reference. Straightforward as following a recipe in a cookbook, it breaks down the details of the process, the resources needed, the prerequisites, and the computation/formula on their version of the strategy in the simplest way possible.
HOW DOES EACH STRATEGY WORK?
Austin Real Estate Investing: Here are 4 Timeless Strategies to Use ; The appropriateness of each strategy below depends on your goals, risk tolerance, and local housing market. For the average investor, it is obvious that some of these strategies would also not likely be suited for booming markets like San Francisco, New York City, Vancouver, or Toronto, where multi-million dollar prices are the norm, and bubble risk is higher.
1. The “Lipstick” Flip
The first impression of a house is incredibly important. The “Lipstick” flip involves buying a house that can be easily improved, and then making minimal cosmetic improvements and repairs to sell for a better price.
For the right property, taking the time to fix small issues with flooring, walls, landscaping, and paint can pay off almost immediately.
2. Buy and Hold
This is one of the oldest strategies in the book, and it’s designed for long-term passive income.
By purchasing a property and leasing it to tenants, it creates a stream of monthly cash flows, and even offers potential tax benefits for the owner.
This has similarities to flipping, but involves finding a buyer for a seller and taking a percentage off the sale. If done right, this can be done quickly and with minimal risk.
4. Buy, Renovate, Rent, Refinance, and Repeat
Likely the most complex strategy in real estate investing for beginners to follow, this can ultimately be used to provide benefits in both the short and long term.
It involves four steps: buying a property, renovating it, renting the property out to tenants, and then refinancing the mortgage later on. Then the process repeats itself.
Of course, this strategy works best in places where property values are rising fast.
Thanks for reading Austin Real Estate Investing: Here are 4 Timeless Strategies to Use. Don’t forget to share this with someone looking to gain financial independence.