Beyond Basics: Unlocking Advanced Real Estate Strategies Through Education

Real estate is a powerful vehicle for investing. This is a highly versatile area, as you can take a hands-on approach and rehabilitate properties yourself, or step back and let an investment trust handle the work while you enjoy the proceeds. You can choose to live in your property, rent your property, or purchase a property for the sole purpose of selling it as quickly as possible. No matter what approach you take, it’s important to thoroughly educate yourself on the options so you can tailor your investment strategy to suit your personal strengths, skills, and financial situation.

Key Takeaways:

• Real estate investment opportunities may offer long-term or short-term profits depending on your approach and management style.
• If you have the skill and knowledge, you can personally rehabilitate your real estate to maximize your profits.
• You can choose to invest in real estate as an individual or as part of a group, and that group may provide either active or passive investment options.
• Educating yourself on the intricacies of different investment opportunities is essential in the complex real estate industry.

Managing Rental Properties

Purchasing and renting homes is one seemingly simple way to make a profit investing in real estate. If you can purchase an affordable property, the monthly payments from your tenant may exceed your own mortgage payments, giving you steady and ongoing income. Though this strategy may look straightforward on the surface, it still requires ample research and planning to execute properly. 

You also need to educate yourself on the local landscape. This will help you determine what to charge for your rental, whether to include utilities and what rental term is best-suited to the local demographic. You may also discover that it would be more profitable to run a vacation rental rather than a residential rental. If you’re prepared to manage the intricacies of turning over a rental frequently between guests and catering to the unique needs of travelers (another course of education entirely), you can often increase your investment income significantly by opting for this route.

House Hacking

House hacking involves renting one portion of your property while actively living in another. This is a smart investment strategy because it allows you to purchase the property with a residential home loan, which typically offers the best interest rate. Done properly, house hacking may let you live mortgage-free because your renter will cover most or all of the monthly mortgage payments.

As with any rental, there are several important considerations to address, such as who pays for utilities, who handles maintenance, and who is responsible for the landscaping. Will you allow your renter to make improvements to the home, or do you want to retain control over all upgrades?

If you purchase a duplex or fourplex, this strategy will allow you to rent out a completely separate portion of the building. If you own a single-family home, you’ll need to be more creative. Perhaps you can rent out a finished apartment above the garage or a space in your basement. You may even opt to rent out extra bedrooms and share your common area. Learning more about these options and their intricacies will help you make the right decision.

Home Flipping

Home renovation TV shows have popularized the process of flipping homes. Savvy investors can purchase unlivable or sorely outdated homes for bargain prices and “flip” them into beautifully updated dwellings. House flipping is complicated, however, because you have to make sure the home ultimately sells for more than the combined purchase price and renovation costs. 

If you’re handy yourself, you may find house flipping the perfect investment opportunity. The labor costs associated with a home renovation can range from $20 to over $200 per hour. If you’re putting in some of that work yourself, you can keep costs lower. It’s also useful if you know how to thoroughly inspect and evaluate the state, value, and potential of a home yourself. If you don’t have this knowledge, make sure you’re working with an extremely knowledgeable and straightforward home inspector who will help you steer clear of poor investments.

Home flipping is a complex process that usually becomes more profitable with experience and education. The more you know, the greater your returns will be.

BRRRR (Buy, Rehab, Rent, Refinance, Repeat)

BRRR is a multi-stage investment strategy that requires a lot of organization and mindful management. It involves five key steps:

• Buy: Purchase a distressed investment property.
• Rehab: Renovate, or “flip” the home.
• Rent: Rent the home out as a residential property.
• Refinance: Refinance the home to gain equity.
• Repeat: Use the equity from your refinance to purchase another home and repeat the process.

As you repeat this strategy, you may find yourself managing several rentals that you’ve used this strategy on. Over time, you might choose to sell these rental properties and take your profits in a lump sum rather than monthly. If you have a strong background in real estate investing, you’ll be able to properly analyze the real estate market and target the key times when it’s best to buy, rent, and sell.

Real Estate Wholesaling

Real estate wholesaling is the process of acting like the middleman between the seller and buyer in a real estate transaction. You will typically negotiate a lower purchase price with the seller and charge more to the buyer who takes over the contract from you before you’ve officially signed. If you can successfully pass the property on to an interested buyer in the right time frame, you don’t need to make any upfront investment in this strategy, which makes it especially appealing to new investors with minimal capital.

While real estate wholesaling requires very little financial investment, it does require a significant investment in time, effort, and education. You must have a detailed understanding of your local real estate market to identify desirable properties that you can sell quickly. You will also need outstanding negotiation skills, as you’ll be haggling over the selling price and purchase price to make sure that you still turn a profit.

Real Estate Investment Trusts (REITs)

A REIT is a company that invests in and manages a significant amount of real estate. This investment is typically focused on income-producing properties, like apartments. As an investor, you simply purchase a share of the total REIT. The company then pays out its dividends to the shareholders. Most REITs will give all their taxable income to their investors which alleviates the company from paying any corporate tax. 

The returns on an REIT don’t necessarily fluctuate along with the market, so this is a great way to diversify your portfolio and add a stable source of long-term passive income. Learn exactly how different REITs work so you can compare your options from a highly educated point of view.

Real Estate Investment Groups (REIGs)

Joining an REIG allows you to pool your investment income with other like-minded parties so you ultimately have more money to work with when you’re purchasing real estate. Each REIG is governed by its own private agreement, so there’s very little standardization in this sector. While investing in an REIG is a great way to spread out the risk and work collaboratively with other investors, it’s not something you should take lightly. 

Invest in your education first so you have the background and knowledge necessary to evaluate different REIGs and their individual rules and regulations. This will help you avoid any major investment mishaps and identify the best available opportunities for your personal needs.

Pursue Continuing Education for Strong Investment Strategies

The best real estate investors are always continuing their education. It’s important to stay up-to-date with all the latest real estate trends and strategies so you never miss an opportunity to optimize your earnings. The Infinity Coaching Program offers ongoing assistance so your investment approach can continually evolve. Sign up for an Infinity Investing 360 Pro Membership to get access to real estate coaching and more.