If you are looking for a creative real estate investing option, that goes beyond the traditional buy-and-hold method, you have come to the right place. In this blog post, we will explore seven creative real estate investing strategies that can help you earn a higher return on your investment. So whether you are a seasoned investor or just getting started, read on to learn more!
1. Covenant-Lite Loans
Also known as “non-recourse debt,” covenant-lite loans are becoming increasingly popular with real estate investors. These loans typically have fewer restrictions (i.e., covenants) than traditional loans, which gives real estate investors more flexibility in how they use the property. For example, covenant-lite loans may not require the borrower to maintain a certain debt-to-income ratio or make a certain number of months’ worth of interest payments before refinancing.
2. Debt Recapitalization
When a real estate investor has owned a property for several years and it has appreciated in value, they may choose to “refinance” the property by taking out a new loan for more than the original purchase price. This allows the savvy real estate investor to tap into the equity they have built up in the property and use it for other investments or expenses.
3. Rent-to-Own Agreements
A rent-to-own agreement is a contract between a landlord and tenant in which the tenant agrees to pay rent plus a premium, typically each month, in exchange for the right to purchase the property at a set price at some point in the future. This type of agreement can be beneficial for both parties because it gives the tenant an opportunity to build equity in the property while also providing the landlord with a guaranteed stream of income.
4. Flipping Houses
House flipping is when an investor buys a property, makes improvements to it, and then quickly sells it for a profit. While this strategy can be profitable, it is important to remember that there is also a risk of losing money if the property does not appreciate in value or if the repairs end up costing more than expected.
5. Wholesaling Properties
Wholesaling is when an investor contracts with a seller to purchase a property and then quickly resells it (usually to another real estate investor) for a higher price. This type of transaction requires quick action and knowledge of the market, but it can be very profitable if done correctly.
6. Lease Options
A lease option is similar to a rent-to-own agreement, but instead of giving the tenant an option to purchase the rental property, it gives them an option to lease it for a specified period of time (usually two to five years). At the end of the lease period, the tenant can either purchase the property or walk away from it with no obligation to do so. This type of arrangement can be beneficial for investors because it provides them with additional upside potential if the property appreciates in value during the lease period as well as protects them through short-term rental deduction opportunities.
7. Real Estate Crowdfunding
Crowdfunding is when people pool their money together to invest in something – like real estate projects. For accredited investors, there are now many different online platforms that allow you access to quality real estate deals without having to go through traditional real estate investing channels. This strategy can be very beneficial for both novice and experienced investors alike, as it allows you to diversify your portfolio without having to put all your eggs in one basket.
There you have it – seven creative real estate investing strategies that can help you earn a higher return on your investment. So whether you are looking for ways to finance your next project or just wanting to try something new, consider giving these real estate investment strategies a try.
The Secret most Real Estate Investors will not tell you~
Many businesses have an accountant and/or bookkeeper on staff, but they may not specialize in Real Estate tax strategies. Though both play an integral role in a business, a Tax Strategist is a key to knowing how to save and stretch money when it comes time to file taxes. Having a tax strategist on your team is a game changer for any real estate investor looking to capitalize on their profits.
Jose A. Ramirez is an experienced tax strategist who helps investors in the Real Estate industry, including those in the activity of Short-Term Rentals such as AirBNB and VRBO, Landlords, Wholesalers, Rehabbers, Flippers, Real Estate Brokers, and Realtors. Schedule an appointment with Jose A. Ramirez for any additional questions you may have about this recent event. Make sure you are subscribed to the Advanced Tax Advisors email list so you can receive current events just like this in the future.