Investing
Investing Options
Real Estate Investing Types
There are a few different types of investing methods in the real estate world. Here's a short summary of the main options!
Sweat Equity
Flipping
Who doesn’t enjoy watching the hottest new flipping show on HGTV? Hollywood makes flipping look like a surefire way to make a pile of cash risk free, but it isn’t this easy in the real world. House flipping isn’t a hobby. It’s a business that can dramatically affect your financial future, positively and negatively. Don’t go into this willy-nilly.
Educate yourself on what is involved with a flip: watch free content on YouTube; take a successful flipper out to lunch to pick their brain; attend one of the many flip open houses that occur in the area; research the cost of materials; or find out the permitting process in the city you’re planning to flip in. The Real Estate Investing Morning Show is a great daily podcast that covers a plethora of investment strategies, including flipping, specific to the Edmonton area.
Feel the BRRRR
BRRRR Method
The idea behind the BRRRR method is that you purchase a property, renovate it, rent it, refinance the loan on the property, and then repeat the process with another property. The key to success with this strategy is to purchase properties with which you can force appreciation with your renovation. When refinancing you pull out all, or most, of your downpayment and renovation money.
If done correctly, the BRRRR method allows you to purchase rental properties without requiring much of your own money. Instead, you’ll use debt to kickstart your real estate investment portfolio and reap in the rewards through passive rental income.
The Long Game
Buy and Hold
Buying a property with the intention of renting it out long term is a basic strategy that has great overall gains.
Not only do you receive monthly cashflow, you gain equity in your mortgage paydown and market appreciation. Here is a general break down of the Buy and Hold strategy:
- Select the right property.
- Fit the property to your ideal tenant profile.
- Have a management plan.
- Maintain the property.
Buying and holding property can set you up for long term financial success, be it a lump sum of cash down the road when you sell it or monthly cash to support your lifestyle.
