Ultimate List of Real Estate Investing Strategies

The world of rental real estate investing offers many opportunities for investors to diversify their portfolios, generate income and capitalize on market trends. These investments range from direct property ownership such as buy and hold, to indirect participation through stocks and investment funds. Understanding each of these real estate investing strategies can help investors make better informed decisions that align with their financial goals and risk tolerance.

Development

Ground up real estate development is a form of high-risk and high-reward real estate investing that involves taking raw land and building a completely new structure on it.

Buy and Hold

Buy and hold refers to a long-term real estate investment strategy where an investor purchases a property, rents it out, and continues to hold it for an extended period of time.

BRRRR

BRRRR (Buy, Rehab, Rent, Refinance, Repeat) involves purchasing a distressed property, adding value by rehabbing, placing new tenants, cash-out refinancing, and repeating the whole process over again with more properties.

House Hacking

House hacking has been around for decades, but only recently received its trendy name. House hacking is simply the act of renting out a part of your home to generate income. Some creative ways also include renting rooms, parking, and ADUs.

Fix and Flips

The fix-and-flip process involves purchasing a distressed property at a discount, renovating it, then selling it at market value for a profit.

Wholesaling

Real estate wholesaling involves finding and getting a property under contract to buy for a discounted price, then reselling that contract to an investor.

Notes

Real estate note investing is a strategy where investors act as the bank to lend money. The lent money is secured by a mortgage or deed of trust to a piece of real estate.

Turnkey

Turnkey investment properties require zero or minimal work to start generating cash flow. Some companies may already even have tenants in place and provide property management services.

Triple Net (NNN)

Triple net (NNN) investing is a type of commercial real estate investment, where the property’s lease agreements stipulate that the tenants are responsible for paying all property-related expenses such as taxes, property insurance, and maintenance costs on top of their base rent payments.

Syndication

Real estate syndication is the process of using investor pooled capital to purchase and reposition real estate, that typically follows a process: Origination, Operation, and Liquidation. Sponsors find and manage the deal, while Investors provide capital in exchange for financial returns.

Real estate stock investing allows investors to gain direct ownership into promising real estate related companies. Since real estate is an extremely broad category, investors have countless options for companies to invest in. From the shopping mall owner and operator Simon Property Group (NYSE:SPG), to real estate software data and marketing companies such as Costar Group (NASDAQ: CSGP), there are plenty of options available for all types of investors.  

Crowdfunding

Real estate crowdfunding has revolutionized traditional real estate investments by giving individuals an opportunity to invest in larger properties they would have normally been unable to afford on their own. With crowdfunded properties, investors pool their money together and invest in shares of different properties, allowing them to diversify their portfolio without the need for a large capital investment.

Tax Liens

Investing in real estate tax liens can be an alternative strategy for real estate investors looking to generate income and potentially acquire properties at a discounted price. Tax liens are legal claims placed by local public government bodies, on properties that are delinquent on their property taxes. Investors can purchase these liens at auctions, to potentially earn attractive returns and, in some cases, even obtain ownership of the property.

Master Leasing

Master leasing is a concept where investors lease an entire property from the owner, then sublease individual units to tenants. This approach allows investors to control and profit from properties without purchasing them, requiring less capital upfront. The master tenant assumes management responsibilities, collects rent from subtenants, and pays the property owner a fixed amount, keeping the difference as profit while building operational experience and cash flow.

Subject-To

Subject-to is a creative financing strategy where an investor acquires property ownership while the seller’s existing mortgage remains in place. The buyer takes title “subject to” the current loan, making payments on the seller’s behalf without formally assuming the mortgage. This method requires minimal down payment and avoids traditional financing hurdles. However, there’s risks like the due-on-sale clause, which could trigger immediate loan repayment if discovered by the lender.

Fractional

Fractional ownership real estate investing offers property investors the opportunity to purchase small shares of ownership in a larger piece of investment real estate. This model allows investors to contribute small amounts of capital and spread out their investment risk across multiple properties. The benefit of fractional ownership is the ability to realize shared financial returns on larger properties that would have otherwise been too costly to invest on their own.

Metaverse

The concept of “Virtual Real Estate” is gaining notoriety especially with Metaverse real estate sales recently bringing in over $500 Million. Metaverse real estate can be described as unique parcels of virtual land, within a virtual world. The promise of these virtual parcels is that they are programmable and can be used for socializing, hosting virtual events, and digital real estate investors can even develop, flip or lease them.

Best Residential Investing

BRRRR

BRRRR (Buy, Rehab, Rent, Refinance, Repeat) involves purchasing a distressed property, adding value by rehabbing, placing new tenants, cash-out refinancing, and repeating the whole process over again with more properties.

Best Commercial Investing

Triple Net (NNN)

Triple net (NNN) investing is a great option for commercial landlords since the tenants are responsible for paying all property-related expenses such as taxes, property insurance, and maintenance costs on top of their base rent payments.