All the recent real estate market news is positive: Rental demand is strong, prices are on an up swing, and distressed inventory levels are low. Are all of these market indicators actually positive for real estate investors looking to capitalize on today’s opportunities?
Savvy investors know the importance of having a variety of investment strategies available to create cash flow and equity. But some investors are stuck spinning their wheels trying to do only what has worked in the past.
Here are three smart strategies that are working great in today’s changing marketplace.
Income Creation Strategy
There is not enough distressed inventory to keep up with the demand of all the real estate investors. Cash sales on houses have risen dramatically as lots of new investors, hedge fund buyers, and foreign investors are buying a lot of houses. Most cash buyers are still relying on the MLS inventory, and they’re bidding against each other to get the limited supply of good deals.
How can savvy investors use this market change to their advantage?
Right now the market is ripe for quality wholesalers who can find great deals and who want to create transactional income right now. So the answer is to ramp up your lead generation marketing, connect with motivated sellers, and start wholesaling houses to assist those cash buyers looking for houses.
Cash Flow Strategy
Savvy investors are already changing from the fix/flip income streams and moving more into buy/hold investing models. They realize the markets are getting stronger, rental demand is strong, and they know now is great time to create monthly cash flow and long-term net-worth by investing.
The market shift for those looking to create cash flow and equity without having a big vault of cash is the re-emergence of true creative real estate. Investors are once again having to rely on creative finance, seller financing, and joint ventures to structure deals–without relying on banks or brokers.
This is a very positive by-product of an improved marketplace.
The most successful investors of today have invested in themselves to learn these more advanced strategies and are actively creating deals on houses that cash buyers don’t even know exist.
Passive Investing Strategy
With the improved markets comes a whole new breed of investor. This investor would love to capitalize on all the positive market news, but has no experience investing, so he can’t do it on his own.
The new breed of passive investor has cash available for investing. They understand financials, the importance of returns, and how to manage investing risk. The way they are capitalizing is by investing passively as a silent funding partner in an active investor’s business, participating as joint venture partner or a true private money lender.
They get to participate in real estate deals, create cash flow and equity without needing to fully understand how to source deals, negotiate, manage rehabs and tenants. They understand the power of compound interest on a portfolio of rental properties and are going to enjoy the returns created in our improving markets.
The investors who are capitalizing are the ones who are nimble and able to change with the markets. They understand there are a lot of strategies that can be employed, and they don’t rely only on buying houses from brokers and financing their investments with their local banker.
We have a great opportunity to change with the markets, but we must be willing to learn and implement new strategies to do it. The good news is: You can be successful creating both income streams for today and long-term wealth and cash flow for the future.
What are your thoughts on the new opportunities created by our improving real estate markets? Leave me your comments, thoughts on real estate investing strategies, and ideas for capitalizing on today’s marketplace.
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