Traditional real estate investing tactics have a proven track record, and there are numerous advantages to using them. However, some new or experienced investors may be looking for alternate ways to generate passive income that may not fall within the scope of standard real estate procedures.
4 Creative Real Estate Investing Strategies
Here are four inventive investing techniques for growing your real estate portfolio.
1. House hacking
House hacking is the practice of owning a house with numerous units and living in one of them while renting out the others. While you live for free, the other tenants should pay your mortgage with their rent payments.
House hacking has grown in popularity since the revenue flow from your other tenants can cover your mortgage payments, property taxes, and other maintenance and housing expenditures. You’ll also be increasing the value of your home while house hacking, so if you can live with others, it could be a terrific alternative for you and your financial adventure.
However, this type of real estate investing may not be suitable for everyone. You’ll almost certainly have to put up with the inconvenience of living with roommates and possibly sharing a kitchen or bathroom. It may be worthwhile to build private kitchens and bathrooms to each unit in order to appreciate and add value to the house while also making your stay more comfortable.
House hacking is also an excellent place to start for new real estate investors. You will learn the ins and outs of real estate investing while living in your primary property, so learning from your mistakes may be simpler because many of your actions will have a personal impact on you. You’ll also qualify for reduced interest rates and be able to keep your owner-occupied loan even after you sell your house, which is great if you want to turn it into a long-term rental.
2. Self-Storage Units
Storage unit investing is popular among real estate investors. This technique of non-conventional real estate investing is highly profitable without the effort and headache of tenant management or home maintenance, both of which are necessities of regular rental ownership.
Self-storage investors can either purchase an existing storage facility or construct a new one, and once the firm is up and operating, automation and sophisticated property management software can handle many of the day-to-day work for you. Look into some of the finest real estate applications for self-storage facility investors to find what works best for you and your business.
This innovative investment plan allows your tenants to select a storage unit, sign a lease, fill it with their possessions, and then forget about it. Tenant management is simple, and once your tenants sign the rental agreement, you will rarely have to deal with them.
Because self-storage units are in high demand, vacancy rates will be kept low while providing a consistent cash flow and long-term profit potential.
This innovative investment plan allows your tenants to select a storage unit, sign a lease, fill it with their possessions, and then forget about it. Tenant management is simple, and once your tenants sign the rental agreement, you will rarely have to deal with them.
Because self-storage units are in high demand, vacancy rates will be kept low while providing a consistent cash flow and long-term profit potential.
3. House Flipping
Flipping properties is another innovative real estate investing approach. This approach, sometimes known as “fix and flip,” is investing in a low-value property, fixing it to improve its appreciating value, and then selling it for a profit. House flipping is a full-time career for many investors, therefore it can be quite profitable when done right.
Because you will not be renting out the home and will simply sell it once you have completed your flip, house flipping can be easier than ordinary rental management. This eliminates the need for tenant screening, rental maintenance, and management
However, you will make more money if you handle much of the “flipping” (renovations and repairs) yourself rather than hiring contractors. If you do not have considerable contracting knowledge, you should reconsider using this strategy.
It’s a good idea to consult with contractors, real estate agents, and interior designers on the best renovations to undertake that will increase the value of your property the most. You will learn a lot about how to sell a house, restore it, and make it ready for inspection. House flipping, on the other hand, is not the most beginner-friendly option on this list. There is some danger involved in the procedure, so be aware that you could lose money.
4. Section 8 Low-Income Housing
You may have heard that Section 8 housing is difficult for landlords to manage or that renters are untrustworthy and harmful to your property. This is not always the case; in fact, Section 8 investing may be a profitable investment for many landlords, and the tenants are more low-stress and long-term than regular renters when subjected to a rigorous tenant screening process.
All of this being stated, it is critical to understand the Section 8 process before applying to the HUD. Because you are continually negotiating a federal program known for long wait times and significant red tape, being a Section 8 landlord is complex and sometimes irritating.
These laws, however, are in place to ensure that every tenant receives fair and equal housing, so if you can muster the patience, it will most certainly be worthwhile in the end.
Conclusion
Creative investment can be a terrific method for rookie landlords to test the market without putting huge quantities of money at risk, as well as for veteran landlords looking for another passive income source. If you think outside the box, you may be able to achieve your financial objectives faster than your competitors who are solely using traditional tactics. Examine each of these techniques and conduct additional research to see if any of them would complement your portfolio.