Knowing which of the property investment strategies to choose as a beginner real estate investor can be a challenging first step in real estate investing.
From long-term rentals through short-term rentals to house wholesaling, all of the options for property investment strategies promise to be lucrative paths for a real estate investment. This fact only makes the choice much harder for a beginner real estate investor.
Let us help you take the proper first step in real estate investing. Here are the best property investment strategies for beginners (and a few that a beginner should avoid!).
Wholesaling Real Estate
Among the top property investment strategies for beginner real estate investors is wholesaling real estate. Wholesaling real estate starts with finding investment properties below market value in the real estate market. Once a real estate investor finds an investment property from a motivated seller willing to let it go for below market value, a contract for wholesaling real estate is drafted. Rather than an actual cash investment, the contract only requires a small fee, sometimes as small as $10. The final step of wholesaling real estate is finding a buyer for the investment property.
Why Is Wholesaling Real Estate Great for Beginners?
The process of wholesaling real estate sounds simple enough, right? Well, it’s not exactly the simplest route for real estate investing. Yet, it is still a great option for beginner real estate investors. The reason for this is the lack of a substantial cash investment needed. Beginner real estate investors who choose wholesaling real estate above other property investment strategies don’t have to worry about having a good credit score or saving up for a cash investment. Wholesaling real estate allows you to be making money in real estate without actually investing money!
The lack of a cash investment also greatly reduces any risk that a real estate investor takes on with investment properties. Rather than having to worry about losing a cash investment, a beginner real estate investor can instead focus on learning everything there is to know about what makes a good real estate investment. From finding the best places to invest in real estate, through locating below market value investment properties, to buying and selling rental properties, beginners get the best real estate education risk-free.
Find investment properties for wholesaling real estate in 15 minutes with Mashvisor. Click here to get started.
The best part of wholesaling real estate? Future financing for rental properties and any of the other property investment strategies! Once real estate investors master wholesaling real estate, not only will they know how to find a promising real estate investment, but they would have also made enough money from a few deals to finance future rental properties.
Turnkey Properties
Turnkey properties might be the best options for long-term property investment strategies for beginners. These investment properties are purchased from a real estate investment company which has already chosen the best places to invest in real estate as well as investment properties that promise rental income and a return on investment. These companies often offer professional property management for turnkey properties as well.
Why Are Turnkey Properties Great for Beginners?
Well, all of the risky decisions in real estate investing have essentially already been made for the real estate investor. None of the other property investment strategies can offer that! The location, the return on investment, and even the rental demand of the turnkey properties will have been analyzed by the company.
Rather than actually making the risky real estate investment decisions, a beginner real estate investor would go about “confirming” that they are all good choices for a real estate investment. Through investment property analysis, a real estate investor can see how the investment properties will be profitable and benefit from their location. In this way, a beginner real estate investor can learn all the characteristics of a good real estate investment, all the while choosing from a list of prepped investment properties.
As a nice bonus, beginner real estate investors can even start making money in real estate within the first month, as tenants usually occupy turnkey properties and provide immediate rental income.
Related: Is Turnkey Property The Best Real Estate Investment Strategy?
Buy and Hold Property Investment Strategies
Buy and hold property investment strategies (whether for long-term rental properties or Airbnb rental properties) consist of putting down a cash investment for an investment property and renting it out to tenants. Rental properties can be sold sometime down the line to get a return on investment from property appreciation.
Why Are Buy and Hold Property Investment Strategies Great for Beginners?
What better way to learn about real estate investing than to experience it first-hand? While the other property investment strategies minimize risk, buy and hold property investment strategies can still be a great option for beginners.
With buy and hold property investment strategies, a real estate investor must learn how to minimize the risk of a real estate investment. It becomes dire to educate oneself on a real estate investment when a cash investment is at stake. This can drive a real estate investor to take the time to analyze investment properties and make the right decisions.
There are ways to make buy and hold property investment strategies easier on beginners:
- Enlist the help of a real estate agent
- Use professional property management
- Use a rental property calculator for investment property analysis
A rental property calculator can help decide which locations make for the best places to invest in real estate. It can also determine the return on investment that can be gained from investment properties. A real estate investing platform like Mashvisor can help limit the risks in choosing a real estate investment for buy and hold property investment strategies.
Sign up for Mashvisor to use the best rental property calculator for real estate investing.
Property Investment Strategies Beginner Real Estate Investors Should Avoid
Fixer-Upper Investment Properties
Fixer-upper investment properties can be appealing to real estate investors because they can often be purchased below market value. However, the cost of repairs, as well as the time it takes to get fixer-upper investment properties ready for tenants, can leave a real estate investor with a negative cash flow property for too long.
A more experienced real estate investor with a few investment properties under his/her belt already will likely have a positive cash flow property (or two) to support fixer-upper investment properties. This is why it’s recommended that beginner real estate investors avoid fixer-upper investment properties until they have built a real estate investment portfolio.
Related: Thinking of Investing in a Fixer-Upper? Answer These Questions First!
Foreclosures
Oftentimes, foreclosures are essentially fixer-upper investment properties that should be avoided as a first-time real estate investment. Besides this, foreclosures come with a large list of difficulties for beginners: dealing with legal issues, auction mentality, and sometimes needing a full cash investment. Foreclosures are great for diversifying an investment portfolio, but not for starting one!
Related: The Pros and Cons of Buying a Foreclosure
Making the right choice of which property investment strategies to use as a beginner real estate investor can make the transition into the world of real estate investing much easier! Start your investment portfolio off right with any of the property investment strategies listed here.
Don’t forget about the great tools Mashvisor offers for a beginner real estate investor (and even a seasoned one). Visit Mashvisor today to find a profitable real estate investment in the US real estate market.