How To Choose The Right Real Estate Investment Strategies

Real Estate Investment StrategiesAnswer: An investment where cash flows, has no problems, makes you money and increases in value. How’s that?

There are a couple of different types of real estate investment strategies to familiarize yourself with:

  1. Flipping
  2. Buy & Hold

Flipping Property

My definition of flipping is when you buy a property, fix the place up, make it a nicer piece of property and sell it for more money. Now I believe that flipping is high risk, but that is the Ken Davidson definition of risk. Everyone’s risk level will vary according to his or her skill-set, interests and goals. Keep that in mind!

Related: Should You Buy Property Just Because It’s A Good Deal?

Remembering The Kelowna Real Estate Market

Flipping was easily the most preferred of the mentioned real estate investment strategies in Kelowna just a few years ago. There was a huge market for flipping in Kelowna and everybody was buying up whatever they could. Even people who shouldn’t have gotten into the real estate business!

To make a long story short, timing was terrible and those people now own properties they have invested money in and they can’t even sell it for what they bought it for, let alone any additional investments they’ve made in renovations etc. To add insult to injury, the properties aren’t creating cash flow either because the rent prices are soft in Kelowna right now.

The bottom line is that you should invest in what you’re passionate about. If you think you want to be out there buying and flipping homes, then you need to consider the risks, the rewards and you have to be passionate about it.

Real Estate Investment StrategiesMake Sure You Have “Multiple Outs”

Flipping is a business and if it is going to become one of your real estate investment strategies, you will need to plan how you are going to run it.

You need what I call multiple outs. If you can’t flip it, could you rent it and recover your cash flow? Would you want to move into it and live there if you had to or can you afford to lower the price substantially if you wanted to blow it out for a fast sale? Think about these questions seriously before purchase.

The Buy & Hold Strategy

The buy and hold strategy tends to be less risky because you are usually buying properly. What I mean by that is when you’re buying a property to hold it, you are buying it with that intention and you are assessing all the odds for a long-term strategy, right off the bat.

Here are a few questions you would need to ask yourself before employing the buy & hold strategy:

  • Does it cash flow?
  • Is it a good investment?
  • Is it an area that I want?
  • Are tenants going to be the right type of tenants that I want to be dealing with?

Related: What You Need To Know When Buying Your First Investment Property

How Long Do You Want To Stay In The Game?

The most important thing to consider when choosing one of these real estate investment strategies is that there are real estate cycles and you have to decide whether or not you are planning to hold for one-cycle or multiple cycles.

What is your intention? What are your goals? The best decision always depends on what is best for you and your passions.

Have a question about real estate investing or any of the real estate investment strategies mentioned in this blog? Leave a comment below.

 

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