My top 10 real estate investment strategies that you can use to create wealth are enumerated below:
Property Assignment – In this investment strategy you negotiate and find a property deal. Get the property under contract and then pass it on to a real estate investor for a fee.
Contemporaneous Settlements – This is a property transaction in which you buy and sell property on the same day. If this investment strategy is applied correctly you can make a fantastic profit without having the need to settle or raise a mortgage.
Buy off the Plans – By using this investment strategy you benefit from the developers and buy property at a discount off the plans. Generally, by the time property is constructed there will be some capital appreciation.
Delayed Settlement – By putting a property under contract and delaying settlement you get the advantage of capital growth when the market is moving up. Alternately you can use the time to make improvement to the property and increase its value.
Use Credit Cards to Purchase and Renovate Properties – This is a good investment strategy wherein you use zero interest money from credit cards to make the down payment and increase the value of your property through renovations. You then refinance the property to pay of the credit card debt before it becomes due.
Use Non-Traditional Lenders – By raising capital from second tier lenders, private investors, equity partnerships, bridging finance you can pump up your profits dramatically.
Vendor Finance – By using this investment strategy you can buy No Money Down properties.
Negative Gearing – When this investment strategy is used correctly, it is like getting interest free loans from the Government in form of tax refunds. Negative gearing is advisable only for individuals who have very high cash flow and taxable incomes. I personally do not subscribe to this strategy, but it’s important that I state it explicitly because as an investor, you will come across this terminology when developers are trying to sell overpriced properties.
Equity Release – This is another great investment strategy to use your equity to either buy more real estate or fund your life style. Better still the money is tax free cash.
Lease to Buy Options – There is a saying in real estate: “it is not how much property you own that matters but how much property you control.” By using ‘lease option investment strategy,’ you can control a very large amount of real estate without buying it. In a lease option, you lease a property with option to buy later when you have the money. By putting lease to buy option in your agreement, you control the property and capital appreciation will accrue to you when you buy.
Foreclosures – Many investors become experts at buying properties at foreclosures or mortgagee sales. By applying this investment strategy alone, you can become a very successful real estate investor.
This list is not comprehensive but only indicative.
Each real estate investment strategy has its place and can be used effectively to meet your stated goal in life. Which strategy you use at a point in time will depend upon your plans based on personal circumstances and the position of the property cycle. But whatever strategy you use, you should do it with a very clear objective; you should always have an exit strategy in place in case things don’t go as per your plans.
You will need to define your real estate investing principles and goals clearly before embarking on a particular strategy.