Tired of watching your money gather dust in a low-yield savings account?
Itching to build a solid real estate portfolio?
You’re in luck—our guide breaks down 12 proven strategies, from generating passive income to building long-term wealth. Lesssgo!
1. Buy and Hold
Think of buy-and-hold as the tortoise in the real estate investing race. It's not about quick flips; it's about building long-term wealth through appreciation and rental income. Start by finding your diamond in the rough—properties with strong potential in up-and-coming neighborhoods or areas with planned development.
The best approach? Crunch the numbers. Factor in mortgage payments, property taxes, maintenance, and—if you decide not to live in the property but rent it out—expected rental income. A healthy cash flow is what you’re aiming for here.
Now comes the “hold” part. Patience is key as you watch property values rise and rental income flows in. Holding builds that all-important equity and generates passive income. Eventually, you can sell for a profit, refinance, or continue enjoying that rental income.
Buy-and-hold offers steady income, appreciation, and tax advantages. But it’s best suited to real estate investors who have bucketloads of patience and a willingness to navigate market changes (if this doesn’t sound like you, strategy number three may be better suited to you).
Learn more: rental property tax guide for new and experienced landlords.
2. Rental Property Investment
Want to generate a steady stream of passive income while building long-term wealth? It’s no big secret, but rental properties are a no-brainer in this department. From cozy single-family homes to sprawling multifamily units, the options are as diverse as your investment goals.
But being a landlord isn't just about collecting rent checks. Nope, managing a property involves finding and screening tenants, crafting ironclad lease agreements, and navigating rental laws. Sound like a headache? This is where professional property management teams do their thing.
A reliable property manager (hey, hello, that’s us, Ziprent) handles all the nitty-gritty, from tenant screening and rent collection to maintenance and legal compliance.
And as an added bonus, they'll ensure your property is well-maintained, your tenants are happy campers, and your investment property is generating maximum returns.
Learn more: how to buy your first rental property.
3. Fix and Flip
Love those home renovation shows and have a knack for spotting hidden potential? Fix-and-flip might be your real estate calling. This strategy remodels diamond-in-the-rough properties into market-ready gems.
It starts with finding undervalued properties—think outdated kitchens, neglected landscaping, or those “cosmetic fixer-uppers” that scare away average buyers. Next, put on your budgeting hat and estimate renovation costs. Factor in materials, labor, and unexpected surprises that always seem to pop up (hello, leaky pipes).
Now, it’s time to channel your inner Joanna Gaines. Manage the renovation process like a pro, whether you're DIY-ing it or hiring a skilled crew. Think upgraded kitchens, spa-like bathrooms, and curb appeal that would make your neighbors jealous.
Finally, it's showtime! Stage your masterpiece and list it at a price that reflects its newfound glory. A successful house flipping hinges on your ability to buy low, renovate strategically, and sell high.
And, unlike the buy-and-hold strategy, fix-and-flip offers short-term returns and the satisfaction of transforming a neglected property. Just beware. It's not for the faint of heart. Fix-and-flip requires market knowledge, renovation expertise, and a keen eye for design.
4. House Hacking
Want to live rent-free and generate some extra income? Welcome to house hacking. It puts your primary residence to work.
How? By renting out a spare room, converting your basement into a cozy apartment, or even building a separate dwelling unit on your property. Suddenly, your house isn't just a home. Oh, no, it's a smart investment that helps you build wealth while you sleep (literally!).
House hacking offers a blend of financial benefits. Not only can you live rent-free (or significantly reduce your housing costs), but you can also generate a steady income stream to pay down your mortgage faster or reinvest in other ventures.
House hacking isn’t all rental checks and all-in-one mortgage accounts, though. It requires property management tact on your behalf—finding reliable tenants, handling maintenance, and finding a harmonious living environment. Easier said than done.
Get it right, though, and you'll gain valuable experience, build your financial foundation, and maybe even make some new friends along the way.
Learn more: buying a rental property before a home.
5. Wholesaling
Wholesaling connects motivated sellers with eager buyers—a fast-paced strategy that involves finding distressed or undervalued properties, putting them under contract, and then assigning that contract to another buyer for a profit.
The key is to become a master deal-finder. You’ll need to build a network of potential sellers (think those facing foreclosure or needing a quick sale) and establish relationships with investors hungry for their next project.
Becoming a real estate wholesaler also requires strong market knowledge and negotiation skills. You need to accurately assess a property's value, identify potential repairs, and negotiate win-win deals for both the seller and the end buyer.
It's a strategy that offers the potential for quick profits with minimal financial investment. You're facilitating a transaction and profiting from the spread between your contract price and the purchase price the buyer pays.
So, if you're a natural networker with a knack for deal-making, wholesaling might be your path to real estate rags to riches.
6. Real Estate Investment Trusts (REITs)
Wishing you owned a slice of a skyscraper or a shopping mall? REITs (Real Estate Investment Trusts) make that dream a reality. REIT companies own and operate income-producing real estate, allowing you to invest in a diversified portfolio of properties without the hassle of being a landlord.
Here’s how it works: instead of saving yet another downpayment, you buy shares in a company that owns and manages properties like office buildings, shopping centers, apartment buildings, and even hotels. They generate income through rent and leases and then distribute a portion of those profits to shareholders as dividends.
REITs, like mutual funds, offer liquidity (meaning you can easily buy and sell shares), diversification (spreading your risk across multiple properties), and the potential for both income and appreciation.
These trusts come in different flavors, from retail and residential to healthcare and industrial. Each type focuses on a specific sector of the real estate market, allowing you to tweak your investments to meet your goals and risk tolerance.
If you're looking for a hands-off way to invest in real estate, REITs might just be the perfect match.
7. Real Estate Investment Groups (REIGs)
Another hands-off investing opportunity? REIGs (Real Estate Investment Groups). These groups pool resources from multiple investors, allowing you to team up and tackle bigger, bolder projects than you could alone.
How does this look? You join forces with other investors, combining your financial firepower and expertise to acquire properties, share risks, and maximize returns. Suddenly, those large-scale apartment complexes or commercial development investments you couldn’t quite swing before seem within reach.
REIGs also provide access to larger and more diverse investment opportunities, reduce your individual risk, and allow you to learn from experienced investors—a win-win-win.
Learn more: out-of-state real estate investing for beginners.
8. Commercial Real Estate
Ready to play in the big leagues of real estate? Commercial properties offer the potential for high income and long-term appreciation. Yup, we’re talking about those towering office buildings, bustling retail spaces, and massive industrial warehouses.
Heads up, though, commercial requires a different skill set from residential real estate investments. Leasing agreements are more complex, tenant relationships can be more demanding, and market conditions fluctuate significantly. You’ll also have to wrap your head around zoning regulations, property taxes, capital gains, and the unique needs of commercial tenants.
Don't let the complexities scare you away, though.
With careful planning, market research, and perhaps a bit of expert guidance, commercial real estate can be a lucrative addition to your investment strategy.
9. Real Estate Crowdfunding
Ever wished you could invest in a luxury condo or a sprawling apartment complex, but your bank account laughed in your face? We’ve got just the thing: real estate crowdfunding. This strategy allows everyday investors to pool their resources and own a piece of the action with smaller upfront costs.
Think of it like Kickstarter for real estate assets. Crowdfunding platforms connect investors with developers and projects. That way, you can browse opportunities, choose your favorites, and invest alongside others. Suddenly, those high-rise condos and trendy retail spaces are within reach.
The beauty of crowdfunding lies in its accessibility. Minimum investments are often lower than traditional real estate ventures. A low barrier to entry that allows you to diversify your investment portfolio and access exciting projects that were once reserved for the ultra-wealthy.
But before you jump on the crowdfunding bandwagon, remember the importance of due diligence. Research the platform, scrutinize the project details, and assess the risks involved. Look for experienced developers, solid financials, and projects that align with your investment goals.
Get ready to reap the rewards of investing in partnerships!
10. Land Development
Just for a moment, think beyond bricks and mortar. What’s left? Land, of course. Uh-huh, land development is where the true real estate visionaries play. It's about converting raw, undeveloped land into thriving communities, bustling commercial centers, or even serene nature escapes.
But land development isn't for the faint of heart. It's a complex dance of zoning regulations, environmental assessments, meticulous planning, and intricate construction processes. You'll need to tackle permits, approvals, and potential roadblocks with the grace of a seasoned developer.
The rewards, however, can be substantial. Successfully developing land can generate significant returns as raw land transforms into valuable real estate. Think residential subdivisions, shopping malls, industrial parks, or even eco-friendly communities.
Land development is a long-term investment that requires vision, patience, and a deep understanding of the market. But for those with an entrepreneurial spirit and a knack for transforming landscapes, it can be a rewarding path to real estate success.
11. Tax Liens and Deeds
Ever dreamt of snapping up a property for pennies on the dollar? Investing in tax liens and deeds might be the answer. You see, when property owners fail to pay their taxes, the government can place a lien on the property and, eventually, auction it off to recoup those unpaid dues.
Here's where the opportunities come in, you savvy investor. By buying a tax lien, you essentially pay off the delinquent taxes and gain a claim on the property. The homeowner then has a set period to repay you, with interest, to clear the lien. If they fail to do so, you might be able to acquire the property through a tax deed sale.
As you can see, tax liens and deeds offer the potential for high returns, as you can acquire properties for significantly less than their market value. Plus, you can earn interest on your investment while you wait for the homeowner to repay or the property to go to auction.
But beware, tax lien investing comes with its own set of risks. Thorough research is super important. You’ll need to understand the local laws, assess the property's condition, and evaluate potential legal challenges. It's definitely not a game for the impulsive or uninformed.
However, if you're a savvy investor with a high-risk tolerance and a knack for due diligence, tax liens, and deeds can be a lucrative way to expand your real estate portfolio.
12. Buy, Rehab, Rent, Refinance, Repeat (BRRRR)
Money printer go BRRRR… Ya-huh, buying properties below market value, renovating them, renting them out, refinancing to pull out equity, and repeating the process is a serious play. A cyclical approach that starts with finding those undervalued properties hiding in plain sight—the fixer-uppers, distressed sales, or off-market deals with untapped potential.
Once you've snagged your bargain, you’re ready to transform the property into a renter's dream with strategic renovations, boosting its value and appeal with cosmetic upgrades, smart improvements, and a touch of design magic.
Now that your property is sparkling, rent the place out and start generating that sweet, sweet rental income. Once your property is generating a steady income stream, it's time for the magic of refinancing. This allows you to pull out your initial investment (or even some profit!), freeing up capital to fuel your next BRRRR adventure.
With that newfound cash in hand, you're ready to dive back into the cycle, acquiring another property and repeating the process. The more you BRRRR, the louder the money printer roars, and the faster your real estate empire expands.
So, if you're ready to embrace the BRRRR cycle and watch your real estate dreams take flight, get ready to buy, rehab, rent, refinance, and repeat your way to financial freedom.
Learn more: should I buy a rental property?
Maximize Your Returns with Smart Management
We've covered a LOT of ground here. From flipping houses to building a real estate empire, the possibilities are endless. But remember, every strategy has its own flavor. Choose wisely, my friend.
Speaking of wise choices… If you really want to find success and ditch the landlord drama, Ziprent's got your back. Our expert property managers handle the daily grind so you can focus on the big picture: making bank.
Ready to partner up? Head to our property management services page, and let's turn your real estate goals into reality.