Tips to Build a Long-Term Real Estate Investment Strategy

For many years now real estate investing has been one of the most popular methods for making your money work for you. While it might be easy to flip your first property or buy your first rent-producing property, it’s a little more difficult to come up with a long-term strategy. Of course, you could keep doing what’s working for you and hope for the best, but we think it’s important to have a sustainable plan that grows your portfolio and your income throughout the years. So, here are a few tips to help you build a long-term real estate investment strategy.

Use the Ever-Growing Buy and Hold

One of the most common tactics for a long-term strategy is using rental properties and their income to continually grow your portfolio. This tactic relies on the rental income of a property being greater than its’ monthly costs, which can be achieved even if you’re paying off a loan on a property. As long as the revenue generated by the property is higher than the monthly mortgage and maintenance costs, you’ll be building equity and cash. You can then use that cash, or the equity you’ve built using a refinance loan, to purchase another rental property and grow your portfolio. This tactic becomes even more profitable when you buy a home that could use a facelift at a discounted rate. After you’ve put the work in to bring the property up to par, you will have a house that produces solid rental income with a generally lower mortgage payment.

Look into Short-Term Rentals

Short-term rentals are growing in popularity because of sites like Airbnb and Vrbo. These properties generally produce more income than rental properties, especially if the home is booked regularly. The downside is that the property will require ongoing effort to keep booked and in rental-ready condition. Still, this tactic can be very profitable if you are willing to put in the work. The high amount of revenue generated from these properties can then be used for other investment opportunities, such as long-term rental or fix and flip properties.

Search for Properties with Potential

The great thing about investing in real estate is that properties tend to appreciate in value, meaning your portfolio is bound to grow in time. However, as you become more experienced you will learn that certain properties have more potential for growth than others. As we mentioned, it’s great to purchase lightly distressed properties and renovate them for maximum return on investment. It’s also important to consider the location a property is in, as you’ll have difficulty renting or selling a property in an area that nobody wants to live in. There are also certain markets that have noticeably high growth, like neighborhoods around up-and-coming cities, and finding a property in these areas can be a great investment.

Be on the Lookout for Highly Profitable Flips

It’s important to have some diversity in your investment portfolio, and while it’s great to have revenue-producing rental properties, sometimes the real money is found in Fix and Flips. If you find a property that’s a great deal but in need of renovation, you’ll want to do your due diligence to ensure the house will have a high enough profit margin to make the flip worth your time. When renovating, you should focus on cost-effective upgrades with broad appeal so you don’t go over your budget. Finally, it’s always important to consider location when dealing with real estate. Look into the surrounding area and make sure it’s a place people want to live since this will make selling your home easier and more profitable.

RCN Capital

RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital also has flexible and competitive loan options available. Connect with us today to discuss your next real estate investment.