When it comes to investments in the real estate sector, investors are faced with two options. There’s the long-term investment strategy and the short-term investments. A long-term real estate investment is about buying real estate properties with the intention of renting it out in the long-term.
A short-term investment strategy means that the holding period of the property is much less or doesn’t exist. As such, the ability to make a return on investment is faster and higher. The main idea is to make a profit out of the short term rental strategy in the shortest time possible.
A lot of real estate investors want to invest in short-term rentals without having to manage the properties or deal with tenants. Such is the power that comes with short term rental investments.
If this is you, feel free to reach out to techvestor.com for help in managing the property. They’ll first research to know whether the investment is good enough to generate $25000 annually. You will then invest and they will take care of everything else for you.
Opportunities in Short-Term Investments
If you have had a landlord before, you probably don’t wish to become one. Fielding calls about oversized bugs and overflowing toilets doesn’t seem like something you’d want to do.
But when handled properly, real estate investing is lucrative. Investing in real estate helps to diversify your existing investment portfolio. And you don’t even have to show up at a tenant’s every beck and call.
The problem is that many investors don’t know how and where to invest, which is why we have this article to help you.
- Real Estate Wholesaling
This short term rental investment is similar to bird dogging, but differs just a little. Like bird dogging, an investor finds a distressed property that’s listed under the market value. Alternatively, they can negotiate a good price with the property’s owner.
This property gets placed under contract as you look for another interested buyer. Profit in this type of investment is made by charging the new buyer a wholesaling fee. This fee is basically what you earn for finding the property and negotiating a deal with the property seller.
If you’re to understand how this works, consider the three parties in the wholesaling deal:
- You are the wholesaler and X is the property owner. Then we have Y who is the buyer of the property.
- You first negotiate a deal with X and put the investment under contract. This happens without paying any of your money.
- You then find Y who is an interested buyer and charges a wholesaling fee
- Y then purchased the property from X
Real estate wholesaling is considered one of the best short-term investments. That’s because an investor doesn’t need money to do it. Yet, if done correctly, you can make thousands of dollars without risking your own money. But like a short-term rental strategist, this investment comes at a high risk.
Backing out of a contract for not finding a buyer can lead to penalties. But that’s only if it’s specified in the contract. Moreover, you risk harming your reputation amongst investors.
- Fix and Flips
You’ve probably seen this on television so many times. Fixing and flipping is about finding a distressed property and renovating it, then selling it for a higher price.
While this investment requires funds to purchase the property and carry out renovations, it can certainly turn into a profitable business. one that brings a lot of money within a short time period.
To be a successful real estate flipper, develop an eye for finding properties that are under their market value. You must also ensure that you have basic knowledge on innovation costs. That’s because the correct estimation of renovation costs is a tie-breaker when it comes to making a profit or breaking even in a fix and flip project.
- Short-Term Corporate Bond Funds
These are bonds that are issued by major corporations to fund their investments. The bonds are considered safe, and you pay interest at regular intervals, perhaps quarterly or twice a year.
Bond funds are good if you want a diversified portfolio of bonds without having to analyse individual bonds. They’re also a good choice for individual investors who don’t have enough money to buy individual bonds.
Note that a short-term corporate bond fund is not insured by the government. This means that there’s a risk of losing money. But the good news is that bonds tend to be quite safe. That’s especially if you’re buying a broadly diversified collection of them.
Moreover, short-term funds offer the least amount of risk exposure to changing interest rates. So you can be sure that the rising or falling rates won’t affect the price of the funds that much.
Bond funds are a collection of corporate bonds from various companies in different industries, including real estate. The diversification means that a poorly performing bond will not hurt the overall return. Also, a short-term corporate bond fund is highly liquid. It can be bought and sold on any day that the financial markets are open.
- Rent Out a Room
Finally, the other short-term investment strategy you can have is renting out part of your home. This kind of investment can significantly reduce housing costs. It allows you to stay in your home while benefiting from price appreciation on your property.
Adding roommates also helps to make a mortgage payment more attainable. But if you are not ready, you can try a site like Airbnb. With Airbnb, you don’t have to take on a long-term tenant.
Also, possible renters get pre-screened by Airbnb. The feeling of renting out a room seems to make it more accessible to people. Don’t hesitate to rent that spare room out if you have one.
Investing in real estate doesn’t have to be about owning a rental property and making a profit from collecting rental income. That’s because, with short-term rental strategies, you can make quick money even without having to hold an investment property.