If you’re an investor, you know that investing in real estate in Australia can be profitable. And not just that, it can also diversify your investment portfolio.
By investing in real estate, you can have numerous tax benefits, improved rate of return, and financial security among many other things.
But to profit from investing in real estate, you need to know that there are different types of real estate assets, just as there are various types of real estate investing.
We made a list of investment strategies to help you choose the best possible type of real estate investing. Let’s check it out.
- House hacking
Duplex, triplex, or fourplex homes and houses with rentable space are ideal for a house hacking strategy. This investment strategy is also great for inexperienced investors and those who are just starting their real estate investment journey.
The house hacking strategy allows you to live in the same house that you’re renting. And the best part is that it can produce income. This way, you can also reduce your housing costs.
If you’re interested in learning how renting out your property works, the house hacking strategy is the best starting strategy there is.
- Live-in flip
Yet another great strategy for investing beginners. The live-in flip is the strategy where you buy a fixer-upper, move in, and live there while renovating it. Later, you can sell the house and get some tax-free profit.
If you’re in the Queensland area, you can hire experienced real estate agents from Mooloolaba to help you find a house below market value. Houses that need improvements that will increase their value are also great for a live-in flip strategy.
Once you flip and sell the house, you can use that profit to buy another fixer-upper and in that way expand your portfolio.
The only downside of this strategy is moving and living in the construction site for years to come.
- Real estate wholesaling
In the real estate wholesaling strategy, you are usually the middle man between the house seller and buyer. By doing this, you can earn money for either of these services or you can collect the difference between what the buyer pays and what the seller gets.
If you’re good at negotiating and marketing, this investment strategy can be great for you.
The wholesaling strategy, in addition to being a great investment strategy, can also be a great business opportunity. If you get the hang of wholesaling, you can easily quit your nine-to-five and generate some pretty great income this way.
- Real estate fix and flip
Fix and flip strategy, as its name suggests, entails finding fixer-uppers, and renovating and reselling them. Most HGTV shows are about real state flipping and earning top dollar.
When it comes to this strategy, time is of the essence. The faster you flip and sell it, the better because if you wait too long, more mortgage you’ll have to pay.
If you’re interested in this strategy, you should know that just like wholesaling, it can turn out to be a great business opportunity.
The key to flipping properties is buying homes that are below market value. Those properties can be easily improved and their value raised.
- BRRRR strategy
BRRRR stands for buy, rehab, rent, refinance and repeat, and it’s a pretty profitable and effective strategy. When it comes to BRRRR, the goal is to profit from a property that is below market value due to a lack of potential.
The BRRRR steps include buying a house that is below market value and renovating and improving it. Then renting it to cover the mortgage, using the cash-out refinancing, and then using that cash to invest in more properties.
This strategy is similar to real estate fix and flip, the only difference is that you’re not selling it but renting.
If you’re a beginner, this strategy is not for you. This strategy is meant for experienced investors, who know how to identify good deals.
- Syndications and crowdfunding
If you’re looking for a passive real estate investing strategy, syndication is the way to go. But keep in mind that even passive investing can turn out to be quite profitable.
The syndication strategy requires pooling funds with other investors to buy properties. Basically, you have to pay syndicators to find and manage deals, and then you benefit from them.
Crowdfunding can be explained as a new version of syndication. For most of these kinds of syndications, you need to be an accredited investor but it’s not always a rule.
Crowdfunding means working with many more investors. That’s why if you choose to try your hand at syndication or crowdfunding, be picky about who you work with and in whose hands you put your money.
- Real Estate Investment Trusts (REITs)
REITs strategy is the only truly passive investment strategy out of all. REITs are corporations that act as mutual funds and they allow you to own a piece of many commercial properties. These properties usually include office buildings, shopping malls, hotels, resorts, warehouses, and mortgages or loans, among others.
As an investor, you can purchase REIT shares and then the trust will pay dividends to you.
Conclusion
These 7 real estate investment strategies can help you decide where you want to start. If you’re an experienced investor, any of these strategies can be great for you. But as a beginner, stick to those that can help you learn and gain more experience.