5 Most Profitable Real Estate Strategies

by Gina DiMasi on June 3, 2019 · 2 comments

Aerial view of houses

Ever wonder what the majority of the wealthiest people in the world have in common? They all own real estate.

Real estate can come in all shapes and sizes (no pun intended). The strategies used vary greatly, but all that means is that you can choose one that fits your preferences and skills best.

This article outlines some of the most profitable real estate methods out there. Let’s dive in!

1. Short-Term Rental Arbitrage

This is when you rent an apartment and then list it (with the owner’s permission) on a website like Airbnb, VRBO or HomeAway.

Short-term rentals (STRs) in themselves are incredibly profitable with guests generally paying over $100 for a single night stay. Multiply that $100 by 30 days in a month, and you have a nice $3,000, which is far more than what a long-term rental would profit. Of course, that means you would have to be booked every single night; however, it’s pretty easy to see just how lucrative STRs can be. Now take homeownership costs out of the equation; the results are an easier real estate strategy for you.

2. The BRRRR Method

The Buy Rehab Rent Refinance Repeat method is a common one used by multi-millionaire real estate investors.

It works by buying a property that is in subpar conditions but in a good neighborhood with cash or equivalent, and rehabbing it to get it to look great. This includes adding bathrooms or bedrooms where possible, renting it out for an appropriate market rent price, refinancing it to pull your original cash out, and repeating by using that same cash to buy another property, rehab it, rent it, refinance and so on.

This strategy increases the velocity of your money incredibly by using the same cash to buy multiple properties. When you refinance the property, you get a mortgage that is completely covered by rent (you want a surplus of rent money, so you’re profiting). When you refinance, the bank will typically give you about 70-75% of the home market price. This part is very important. It means that you want to make sure you’re buying low enough and doing the right rehab to get the market value of the home to be at least 30% more than what you’re all in the property corn (purchase price Andy rehab costs).

When done correctly, this strategy can build your wealth incredibly fast.

3. Apartment Complex Syndications

This strategy is when one investor pools money from multiple investors to have one big lump sum to be able to buy an apartment complex.

In these deals, you can choose to be an active or passive investor. If you were active, it might mean you are investing your time by scouting deals, finalizing new contracts, or running numbers while also potentially investing your money. If you are passive, it just means you are investing your money into the deal for a return.

These sorts of deals happen between experienced investors who don’t have the capital to invest. That said, if you’re a newbie who 2nts to learn more, try networking with some experienced investors and offerings up your time to help so then, in turn, you get to learn from them.

4. Mobile Home Parks

Buying a mobile home park actually means you are buying the land that the mobile homes sit on, not the actual homes. The beauty of this? You don’t actually have to upkeep the home like you would with a normal multi-family or apartment complex. Instead, you have to upkeep the land plus any common area so there might be.

Mobile home parks are also often to be one of the best recession proof investments because it’s very costly for the tenants to move out (they have to pay to move their home, remove any hookups to water and electric and pay to get into another park). They are also relatively cheap for the tenants to live there.

Finding a loan for a mobile home park may be harder than a multi-family, but it isn’t possible. There are plenty of ways to get creative with funding these deals.

5. Wholesaling

This strategy is when you, the wholesaler, find deals and sells them instead of putting them on the market. The wholesaler earns money when’s they get a deal from the seller at a low price and sell it to an investor at a higher price.

Some wholesalers have a huge network of investors who know they are wholesalers so if they want to find a deal or sell a property, they go to them.

Other wholesalers work to find deals by scouring the streets and finding owners who may be interested in selling.

Regardless, this method can snowball profits fast if you are churning deals. It’s a low barrier to entry as well since you really only need to invest your time and energy, no capital. For more information see this post: Wholesale Real Estate: The Ambitious Agent’s Ultimate Guide to Winning Ethically.

Final Thoughts

Real estate has been proven to be one of the strongest income-producing investments by the millionaires who partake. If you are looking to get started in real estate,  be sure to do your research and choose your investment strategy wisely. The strategies listed above are great options for those looking to get the most out of their time and money.

{ 2 comments… read them below or add one }

1 James Hendrickson June 3, 2019 at 4:11 pm

Um…what about just owning your own home?

2 Gina DiMasi June 7, 2019 at 12:07 pm

Hi James, Thanks for reading! Owning your own home can definitely be a great investment however I did not include it in this list because I personally do not consider it to be one of the top 5 most profitable. This is due to the fact that often people try to buy in areas where they believe the market may appreciate, but appreciation is speculation so any sort of speculation like that where you don’t have as much control as the strategies listed above makes it a little less attractive solely as a profit driven strategy. That said, owning a house can be a great investment! It really depends on the situation. Even if your house appreciates greatly over 30 years and you sell it, there are all the other costs that went into owning it for 30 years that really wipe out the “return” the owner may think they’re getting upon selling. Hope this makes sense and thanks again for reading!

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