Updated May 4, 2022.
If you’re wondering how to create wealth investing in real estate, then you’re in the right place to learn about some of the best real estate investing strategies. It’s one thing to dive in and start buying, selling, and renting out properties—but without the right insights, you might not be able to make a substantial return on your investment to generate wealth. If you’re a beginner, this might seem daunting. However, with the right information and some creative real estate investing, you can start making a profit.
With the ideas outlined below, you’ll be well on your way to maximizing your return and building your wealth through real estate investing.
Leverage Builds Wealth
What is leverage? Many investors agree that it’s the most significant factor they can use to accelerate the growth of their wealth.
Leverage is a way to use borrowed money to increase the potential return of an investment in real estate market. This borrowed money can be a mortgage or a hard money loan, but its purpose is to allow you to buy a property with more money than you have saved. Leverage allows you to start working on a property that you might not be able to buy with only cash and maximize your returns sooner rather than later. The opportunity to leverage in this way makes real estate so attractive to investors.
In addition to leverage, property investors can build wealth through real estate in various ways!
Fix-and-Flip For Profit
As a fix-and-flip investor, your goal is to upgrade the property and target local buyers or rental property owners to buy the renovated home from you. However, flipping houses can look different depending on how you go about it.
Traditionally, fix-and-flip meant buying a downtrodden property for a small amount of money and then pouring resources into it to make it livable and desirable. In most cases, the property would have been in poor condition with unusable amenities, almost entirely in disrepair. Either through hiring contractors or getting into it themselves, investors would fix up the house and turn it from “nothing” into “something.” They’d give it a complete renovation and then sell the home for more than what they paid for it, plus the costs of repairs. It was a viable route to take if you had the skills or the connections, but it could also be expensive and time-consuming.
These days, fix-and-flip investors tend to focus more on the “flip” than on the “fix.” They will buy a property at a good price and then remodel it specifically to sell to a target demographic. It helps to know the market and what people are looking for to turn the house into something in high demand.
In many cases, instead of gutting the home and fully renovating as in days past, this can look like switching out all of the light switches for dimmers, installing a pool or backyard fireplace, or setting up surround sound in the living room. To enhance your income through fix-and-flips, take the time to research the trends in a specific market and then capitalize on them. Be sure to stage the property well by cleaning it and using the thoughtful placement of key furnishings and decor. The best fix-and-flip real estate investing strategies work best by making the house look as appealing as it can and securing that first impression on potential buyers and renters.
Optimize Your Research Strategy
Another creative real estate investment strategy to help generate wealth is to take the time to research the market and buy and sell accordingly. While this sounds simple in theory, investors must stay on top of the market and jump at the best deals as soon as they find them. A real estate agent in the markets where you invest can be an excellent resource because they know their local real estate trends and have the connections to help you succeed.
However, if you don’t have a real estate agent that can help you find real estate properties in multiple markets, optimizing your research strategy is easier with the right software. With the technology, information, and algorithms available through Privy, investors don’t have to have a team of people scouring markets for the best deals or investment property. Of course, an excellent real estate agent can help you make offers and close deals, but starting with insider access to real estate investment deals pulled off by highly experienced investors can shorten how long you have to look for your next property and help you close at better prices.
Consider Wholesaling
When considering how to create wealth investing in real estate, investors don’t have to focus so much on the property itself. Wholesaling is a great option for investors who aren’t looking to take the time to fix up, remodel, or stage a house. Instead, getting involved in the negotiation of buying and selling—while leaving the fixing and flipping up to other parties—can be an ideal way to build more wealth.
Wholesaling is the process of buying a property for a very low amount due to its state of disrepair. Investors then create a purchase agreement contract with the seller, which gives them the rights to the property. Now you can sell those rights to someone interested in fixing the place up and make a profit on the sale.
The beauty of this strategy is that a real estate investor doesn’t need any cash or credit because they are simply acting as a middleman between a buyer and a seller. However, it’s essential to understand that through this process, you are not selling a property; you’re only selling the rights to a purchase contract. Therefore, especially if you’re just starting, it may be beneficial to consult with a real estate lawyer to ensure that everything is done correctly and legally.
Take Advantage of Tax Deductions
Depending on how you choose to own or operate real estate investments, you can also take advantage of different kinds of tax deductions which help you save money and increase returns and wealth, especially when owning rental property. Working with an accountant that knows the real estate industry can help you make gains by itemizing and maximizing real estate deductions. In addition, keeping good records throughout the year and understanding the best deductions for the type of real estate investments you choose can help you build long-term sustainable wealth!
Real Estate Wealth Begins With the Right Investment Properties
Keep in mind that no matter which of the real estate investing strategies you choose to go with, the longer you own a property and apply the right insights, then the more income you can accrue at a faster pace year after year. However, building your portfolio with properties that fit your long-term goals requires the right strategy and tools to gain an advantage over other investors in your favorite markets.
With Privy, real estate investors can get to the deal fastest and find out about the hottest deals first! Our technology delivers the best properties and deals that meet your criteria directly to your inbox. Then, when you have funds to leverage for your next property, you can have confidence that you're offering and buying at the right prices. Reach out soon to learn more about the Privy Advantage!
Learn more strategies for real estate investing success! Download our free ebook, “How to Invest In Real Estate: A Guide!”
