10 Popular Real Estate Investment Strategies for Beginners and Pros

Whether you’re investing in commercial, residential, or any other type of real estate, investment strategies will help you go a long way.

It is not enough to jump on any investment deal because it appears profitable. Take some time to look deeply and think of the best strategies before investing.

Both seasoned and new real estate investors would agree that there’s a rather long list of investment strategies in real estate.

Find out how you can make thousands of dollars from real estate using these investment strategies!

If you’re an experienced investor or just delving into real estate, this article will be a great foundation to help you profit from real estate investments.

10 Real Estate Investment Strategies to Try Out

The following are the most popular real estate strategies that have proven to be profitable:

Passive Buy and Hold

The passive buy and hold investment method is one of the most straightforward strategies. It involves investing in profitable multifamily property or commercial projects, and enjoying a flow of quarterly or monthly rental income while the investment strategist takes care of operations.

With this strategy, you can get a positive cash flow as well as capital appreciation typically in the mid to long term. A passive buy and hold strategy works for real estate investors who don’t have huge capital to invest, but still want to access the positive aspects of a real estate investment. You can take advantage of tax benefits and regular dividends while your capital appreciates in a stable investment vehicle.

Buy and hold is also available as an active approach. You will be in charge of forming a syndicate, managing investors, as well as running daily operations of the property. While this can be a remunerative method for real estate investment, managing a project of this caliber on your own has its risks. It’s recommended to only proceed if you have sufficient knowledge and experience in buy and hold real estate investments.

Pros of Syndication

• As a passive strategy, this approach is more accessible to investors than other methods – like purchasing a rental property – since the entry is so low. Unlike other real estate investment strategies, it doesn’t require industry experience to passively participate in a professionally managed buy and hold investment.
• Working with a professional investor allows busy individuals to passively invest in real estate without the significant time and financial commitments required by other strategies.
• As a more affordable option than single-family homes, multifamily property is always in demand – particularly among young professionals, students, and low income families. This means that your rental dividends are likely to be more stable than a single family property investment.
• There is no maintenance or tenant management required in a passive investment strategy.

Cons of syndication

• Capital appreciation may take some time. Most times, syndicated investments will see the most significant results in the mid to long term. If you’re looking for a quick-cash strategy, this might not be your best option.
• Certain investment firms require investors to be accredited to participate.

If you’re looking for lucrative, hands-off buy-and-hold real estate investments to carry you to your financial goals, get in touch with Pinto Capital today. We educate new and seasoned investors, helping them to earn regular dividends and secure their financial future the easy way, with completely passive multifamily and commercial investments!

Buy and Rent

Also known as Traditional Rental property, the Buy and Rent investment strategy is one where you purchase income-producing properties or even an undervalued property and lease it out for rent. It is another excellent and easy investment plan that works if you generate income and still gain in the long run.

With buy and rent, your investment property becomes a rental property for a long-term basis. This way, you can receive monthly rent and generally guarantee a positive cash flow.

Pros of Buy and Rent

• It is found among traditional real estate investment strategies and is easy to understand, making it an excellent choice for a beginner real estate investor.
• The buy-and-rent method allows real estate investors to earn monthly income.
• It can be a profitable passive investment strategy when you hire a property management company. While property management will cut into your bottom line, they will help you oversee the smooth operation of your property while you grow your investment portfolio and enjoy your passive income.
• The Buy and Rent strategy allows for versatility. In case of economic uncertainty, you can decide to convert your property into a short let or Airbnb space.

Cons of Buy and Rent

• Employing the Buy and Rent investing strategy automatically turns you from a real estate investor to a landlord. Becoming a landlord means you are now responsible for tenants and the entire property, and we know not everyone is cut out for this responsibility. If you can handle it, great! But if you can’t, thankfully, you can always hire a property management company.
• With this strategy, you are responsible for anything that happens to the property, including damages.
• The buy-and-rent approach doesn’t yield as many capital gains or investment returns as other real estate investments.

Fix and Flip

Another popular real estate investing strategy is the Fix and Flip investing. The fix and flip strategy involves purchasing undeveloped land or an undervalued property, fixing it to increase market value, and then reselling it at a very high price.

It is a typical commercial real estate investing strategy that most experienced investors are familiar with. It could be a profitable strategy if you’re a beginner in the real estate industry, especially if you expect to make quick cash.

The fix and flip real estate investing approach is usually more of a real estate business than an investment. With this strategy, a real estate investor can enjoy massive benefits quickly if they have enough capital and time available to buy and fix the investment properties.

Pros of Fix and Flip

• The fix and flip strategy is one of the fastest ways for new and seasoned investors to make a generous amount of cash. You can quickly profit in six months or less if you can resell high-value assets in real estate markets.
• It is a great method for new investors who want real-time experience in property purchase, repairs, management, and property resales. You’ll need to ensure you have the spare time to pour into the project to make it a success. 
• Access to asset loans becomes a lot easier because most loan companies know that house flipping – when done successfully – is a quick way to make money, pay off real estate debt and reduce interest rates.
• The option of a live-in flip allows the real estate investor to live in the property for a while and fix it up before reselling it at a higher price.
• If you’re not sure about being in the real estate industry for a long time, this strategy doesn’t require a long-term commitment.
• The trouble of dealing with tenants is eliminated.

Cons of Fix and Flip

• It requires sufficient capital before venturing into this area of real estate investing. Like investing in value-added properties, a lot goes into repairing and fixing real estate assets in poor conditions.
• Fix, and flip strategy requires working with expert real estate developers if you genuinely want to increase the property market value. That alone costs a lot of money and can be tricky for a new investor.
• It is not a passive investment strategy because you’re investing capital and physical efforts into this real estate investment plan.
• Once the property has been resold, you can’t benefit from future land/property appreciation.
• The fix and flip investment strategy works well with a strong network of real estate agents and other investors since you’ll have to sell the property quickly. Choosing this method can be challenging if you’re new to real estate.

BRRRR Strategy

Whether you’re a seasoned investor or a newbie in the real estate industry, the BRRRR investment strategy comes highly recommended. BRRRR means Buy, Remodel, Rent, Refinance, Repeat.

Here, the investor buys a property in poor conditions at a low cost, remodels it until it is up to standard, and rents the property to tenants at a reasonable rate for about six months.

Once you earn a significant cash flow, refinance the investment property with your equity and then repeat the process with a new investment property. This method works efficiently for new and seasoned real estate investors because you can leverage low-risk investment properties to build your investment portfolio.

Pros of BRRRR Strategy

• It is a great way to build your investment portfolio quickly as a new investor without running into high investment risks.
• The BRRRR strategy effectively forces a property’s appreciation until it is sold at a long-term return.
• You can sell your existing investment properties to buy new ones without needing loans or real estate financing.

Cons of BRRRR Strategy

• You can’t earn a passive income if you employ this investment strategy. It is one of the most active real estate investing methods, and whatever you get from rent goes into refinancing.
• As a new investor, this can be a tricky investment strategy, especially if you do not know how real estate investments work.
• A network of real estate professionals is needed if you want this strategy to work for you. While this may be easy for experienced investors, budding investors may find this problematic.

Real Estate Investment Trusts (REITs)

REITs are another popular and profitable real estate investing strategy. Investing in a Real Estate Investment Trust company is a great way to earn off real estate if you’re not interested in owning physical real estate.

REIT companies usually buy and operate income-producing properties, then allow real estate investors to buy a share in their company. Hence, you own stocks with the company, bringing in quarterly and monthly dividends and capital gains in the future. Investing in a Real estate investment Trust company is perhaps the most passive asset investing strategy because you only need to invest without doing anything else.

Pros of Real Estate Investment Trusts

• This type of real estate investing is perhaps the most uncomplicated investment strategy because it doesn’t require expert knowledge of the real estate market before investing.
• It is a great passive cash flow source because you don’t need to do anything. You need to invest in the company and enjoy your monthly or quarterly income.
• Whether you’re a new or expert investor looking for how to earn quickly from real estate, REIT is a fast way of earning from your investment.
• You can invest in different real estate properties without requiring colossal capital.

Cons of Real Estate Investment Trusts

• If you want an authentic experience in real estate and to build your work portfolio, investing in REIT may not be your best strategy.
• You have no say in the type of properties the real estate investment trust company invests in or how they manage it.
• You can’t demand an increase in your quarterly or monthly income.

Wholesaling

Real estate wholesaling involves getting a property contract posing as a potential buyer, and quickly finding another buyer—the new buyer signs the property contract, including the purchase price and your return.

With this investment strategy, you act as a middleman in a real estate transaction and secure buyers for properties. Wholesaling is a common and easy investment strategy to engage in whether you’re a seasoned or budding real estate agent.

A real estate wholesaling strategy is a great way to earn without necessarily owning real estate properties.

If you want to broaden your knowledge of real estate investing without owning physical real estate, then wholesaling is perhaps the right choice to venture into.

Pros of Wholesaling

• It is a fast way to make money off real estate investing.
• You don’t need significant capital to employ this investment strategy.
• You can improve your knowledge of real estate without owning real estate properties.
• Real estate wholesaling doesn’t require any form of long-term commitment.
• Choosing this investment strategy can be very lucrative if you have a strong network of real estate professionals. You can make massive profits from just a single deal.

Cons of Wholesaling

• One of the disadvantages of real estate wholesaling is that it is one of the riskier real estate investment strategies, especially when finding your buyer.
• You have a strict deadline to get your buyer, or you must honor the contract and be the new buyer.
• To succeed with this investment strategy, you must have exceptional marketing skills to convince potential buyers to buy the property at a higher price than the original.
• You have no claims about future appreciation of the real estate assets you sold.

Real Estate Investment Groups (REIGs)

The Real Estate Investment Group strategy is most common among private investors and newbies in the real estate sector. It involves a group of real estate professionals coming together to contribute funds to invest in real estate assets.

Unlike REITs which are legal companies, REIGs are not regulated and don’t have strict requirements. However, knowing that this type of real estate investing strategy comes with high risks is essential.

This strategy works if you’re new to the real estate world and need to work and learn with real estate professionals who are already experienced.

Pros of Real Estate Investment Groups

• You don’t need much capital to invest with a real estate investment group.
• It provides an avenue to work with seasoned realtors and build a network of professionals in the industry.
• Since REIGs are not regulated by an official body, you and other members can set the rules and dynamics of the investment group.
• New investors can learn and share ideas with others who have more experience.

Cons of Real Estate Investment Groups

• The lack of a governing or regulatory body can lead to disagreements and power imbalances, leading to group division.
• It is a high-risk investment strategy that is prone to mismanagement.

House Hacking

House hacking is one of the many real estate investment plans employed by investors. It involves purchasing a duplex, multi-family home, or any other residential yet income-producing property and leasing a part of it to tenants while you live on it simultaneously.

It is a profitable investment strategy that allows you to be a landlord while earning from your property. Employing this strategy when investing in rental properties will significantly reduce housing costs and serve as a source of passive income.

Pros of House Hacking

• This investment strategy allows you to decrease housing expenses while earning off your property. The cash flow you get from your rental property can help cover housing costs and even allow you to make mortgage payments if needed.
• There’s no need to pay for the services of a property management company. Since you are living on the same rental property, it is easy to oversee and manage the affairs of the building.

Cons of House Hacking

• Sometimes living with tenants can be infuriating, especially when they are noisy, cause damage to your rental property or make unnecessary demands.
• While earning a passive rental income from house hacking is easy, the process is not a passive investing strategy since you’re actively involved in maintaining the rental property.

Fractional Investing

Fractional investing allows investors to buy parts of a single share in a property investment deal. It is also almost similar to REIT, but here, investors can only invest in bits of a single share, especially if purchasing the share is very expensive.

Pros of Fractional Investing

• You can become an investor in commercial real estate even with a small amount of money.
• You don’t have to have expert knowledge of real estate to invest and earn.

Cons of Fractional Investing

• There’s no guarantee you’ll make profits off this investment strategy
• Even if you profit from this strategy, it might be low compared to other investment strategies.

Hard Money Lending

The hard money investing strategy is another way to make money off real estate investments without owning physical real estate. The target is most investors who have very little capital or bad credit. All you need to do is fix a payment plan, and you’re good to go.

Pros of Hard Money Lending

• You can set the terms of the loan and payment plan.
• You help other investors fund their investment projects and earn from them.
• You don’t have to actively invest in real estate properties to carry out this investment strategy.

Cons of Hard Money Lending

• There’s no 100% guarantee that debtors will pay back your money, especially if there’s no binding contract.

Bottom Line

Building wealth in real estate can be effortless once you know about working investment strategies. We’ve discussed ten of the most popular investment strategies alongside their benefits and pitfalls.

One common pitfall faced by investors in the modern world is a lack of time, knowledge, or capital to pull off a successful real estate investment strategy. If you want to participate in a profitable real estate investment without the fuss and excessive capital demands, get in touch with the investment experts at Pinto Capital today. We’ll guide you through every step of the process to ensure you’re making the best informed decisions about your financial future.