Investing in real estate is one of THE best ways to secure your financial future & hit your life’s goals.
From the tax breaks to the ROI, building a healthy real estate portfolio can be one of the best decisions you’ll ever make.
When it comes to choosing which investing strategy to use, though, making that decision can be hard.
There’s a wide variety of investing strategies you can use with each one having its pros and cons.
In this guide, we’re going to break down 12 of the best real estate investing strategies and show you who they’re for, why they work so well, and help you decide which one is the best for you, personally.
Before we get into the strategies, though, it’s worth understanding the difference between goals, strategies, and tactics.
Goals vs Strategies vs Tactics
An easy way to look at real estate investing is by looking at it like you’re climbing a mountain.
You’re at the base of the mountain right now.
And your personal, financial, and life goals are sitting at the top of the mountain.
The strategies you use become the plans for how you’re going to get up the mountain to begin with.
There’s different paths you can take with some being easier to climb and others getting you to the top of the mountain even faster.
Tactics, though, are more like the different tools you’ll use while you’re climbing. They’re anything that will help you actually get up the different paths.
Where many investors get caught, though, is by trying to use tactics to climb the mountain.
Without having a fundamental understanding of their goals and the strategies they can use to hit those goals, using tactics tends to feel good but could also lead them right off the side of the cliff.
So before you get started investing, make sure you understand your goals. Then learn which strategy can help you both safely and effectively hit those goals in the least amount of time possible.
Once you’ve done that, you can start learning the tactics inside of those strategies to begin taking shortcuts up the mountain.
12 Best Real Estate Investing Strategies
In my experience, below are 12 of the best real estate investing strategies you can use to climb the mountain and hit your personal, financial, and life goals.
To help you understand when and where each of these strategies are used, we’re going to give you a brief overview on each and then link you to more resources so you can dive deeper if the strategy feels like one that meets you where you’re at right now.
#1 – Wholesaling / Wholetailing
Wholesaling is an age-old, time-tested strategy that has you tracking down sellers, getting an “assignment” contract on their property, and then connecting with buyers.
Once you’ve found a buyer, you can assign the contract to them, collecting the difference between what you signed the house for and what you flipped the contract to your buyer for.
To give you an example, let’s say you found someone willing to sell their property for $250,000. Then you found a buyer willing to pay $275,000 for that same property. You would collect the difference of $25,000 for helping facilitate the deal.
Wholetailing is a bit of a newer strategy that puts a spin on wholesaling.
In a wholetailing deal, you take a property that needs very few repairs, get it under contract, perform the repairs, and then flip the property on the MLS — to a retail buyer.
It combines the simplicity of wholesaling with the upside of retail selling but does include a bit of risk since you’ll need to close on the property yourself before you can start performing the repairs.
To learn more about these strategies, check out the guides below:
#2 – House Hacking
House Hacking is a strategy that’s great for buyers looking to jumpstart building equity while establishing a portfolio of income-producing properties.
To put it in simple terms, house hacking revolves around you purchasing a property that you’ll live in.
Then you can rent part of it out to reduce your mortgage payments while sometimes turning a profit.
You would use this added income to help pay down the mortgage, build up equity, and establish yourself and your credit so you can purchase more properties in the future.
This strategy works great for properties like duplexes, triplexes, or small apartment buildings, as well as single family homes that have rentable spaces like a guest house, basement, or spare bedrooms.
House Hacking is great because you learn the in’s and out’s of being a landlord while living in the property.
From there, you can start to transition the property into a longer-term rental unit while looking into purchasing your next property, rinsing, and repeating the strategy.
Below is a great guide you can use to learn more about the House Hacking strategy:
#3 – Live-In-Flip
The Live-In-Flip strategy involves you buying a home and then moving into it while you’re performing the necessary renovations.
Then, once you’ve lived in it for up to two years, you can move to sell it for a profit.
Under the IRS rules, this helps you avoid paying taxes on any profit you generate up to $250,000 if you sell it as an individual or up to $500,000 if you’re married when you sell it.
You can then take that money and put it into your next home, moving in while you’re renovating it, performing the repairs, and then selling the property after two years.
This strategy lets you uplevel your home every two years while purchasing the property at a steep discount, due to the repairs needed.
With it, you’ll learn how to do the renovations yourself (or work with contractors to perform the renovations) and learn how to flip the properties for a profit, paving the way for other strategies on this list.
#4 – Live-In-Rent
The Live-In-Rent strategy is similar to the Live-In-Flip strategy but instead of flipping the property after you’re done living in it, you’ll rent it out and become a landlord.
This means any house you purchase must be able to function as the home you’ll live in while also being able to be rented out when you’re ready to upgrade your home down the road.
This is a great way to start building up a portfolio of rental properties (and rental income) while you’re buying and living in homes that you love.
The upside to this strategy is that you’re not living with (or next to) your tenants like you would be with the House Hacking strategy.
#5 – BRRRR
The BRRRR strategy stands for buy, remodel, rent, refinance, repeat and, when done properly, is an excellent way to start building your rental portfolio.
With this strategy, you’ll take the cash from each refinance and put it into your next investment property.
That means you can quickly snowball the size of your portfolio while making sure each previous property is covered by the rental income it’s generating.
To do this, you’re looking for properties that are below retail/market value that could use some renovations.
Then, after you’ve renovated the property and stabilized its market value, you can begin renting it out and refinance it with a longer term mortgage.
When done right, you can sometimes get all of your original investment capital back so you can begin funding your next deal.
To learn more about the BRRRR strategy, check out the guides below>
#6 – Debt Snowballing
The Debt Snowballing strategy is a great way to predictably reduce risk, build wealth, and turn your debt into a recurring income stream through rental properties.
It revolves around gathering as much cash flow as possible from your current rentals and other resources, like your job or alternative investment strategies, and putting that cash toward paying down the debt you’re carrying on the properties.
With this strategy, you’ll focus all of your effort into paying down one mortgage at a time.
When done right, you’ll take the money you’re saving from no longer carrying the first mortgage to begin helping pay down the second mortgage even faster.
This is how you snowball paying down your debt — as each additional mortgage you pay off can be used to pay off additional mortgages.
The end result is retiring early with a portfolio of rental properties, consistently generating income for you month-over-month.
#7 – Land Flipping
Land flipping is a strategy similar to wholesaling where you’ll find land for sale, get it under an assignment contract, and then find a buyer or developer who wants to purchase the land.
When you connect with the buyer, you’ll assign the contract to them and collect the difference between what you contracted the property for and what the buyer or developer is willing to pay for it.
The upside here is that land tends to sell for significantly higher prices (and higher margins) than what a home will sell for, making this a great strategy to use if you’re looking for more upside potential.
The downside is that there’s a lot of laws and ordinances that dictate what land can be used for so the due diligence required to find land that developers are interested in can be a new learning curve altogether.
When done right, though, land flipping is a great way to quickly build real wealth.
#8 – AirBnB
AirBnB investing has massively grown in popularity over the last handful of years.
With this strategy, you’ll find properties that are in desired vacation, tourist, and travel areas and then turn the property into a short-term rental unit.
Instead of working with long-term tenants, you can generate a higher return on investment by renting out the property on a platform like AirBnB or VRBO.
If the property is in a desirable location, you can generate significantly more income through short-term rentals than you will long-term rentals.
However, you’ll typically need to work with a property management company to ensure the property is cleaned between guests and that it is being maintained — if you’re not going to do that work yourself.
#9 – Mobile Home Parks
Investing in mobile home parks is a strategy that typically gets looked down upon by a lot of investors but, if you’re scrappy, can be an amazing way to build wealth.
With this strategy, you’re purchasing the land that the mobile home park is on and then leasing each lot to the tenant that has their mobile home on it.
This generates recurring revenue while the land builds value.
The upside potential here is huge as land (especially income-generating land) appreciates in value at a higher rate than a typical single family residence.
The downside is that you may deal with issues like crime if you purchase a park in the wrong area.
#10 – Fix-And-Flip / Fix-And-Rent
The Fix-And-Flip and Fix-And-Rent investing strategies are what most investors know and love about the industry.
With these strategies, you’re taking the traditional approach of finding a property, purchasing it, renovating it, and then either flipping it for a profit or holding onto it and renting it out.
Since this strategy is so attractive to most new investors, it’s worth taking a chance to dive deeper.
Check out these guides to learn more about the ins and outs of each of these strategies:
Which Real Estate Investing Strategy Is Right For You?
Ultimately, this decision is going to be incredibly personal.
You’ll need to understand your own personal goals, what you have (in terms of finances) available right now, and which strategy can meet you in the middle — where your skillset and finances meet.
If you still aren’t sure which of these are the best real estate investing strategies to use, check out the guide below to do a bit more research:
