Long-Term Vs Short-Term Real Estate Investment Strategies (2024)

By: Herman Torres0 comments

Whether you’re committed to a long-term investment strategy or would like to test the waters with short-term investments, real estate has the potential to make you a millionaire. Real estate properties are globally known to be one of the safest and most stable investment vehicles in the market. It’s said that 90% of millionaires built their wealth through real estate investments.

Benefits of Real Estate Investing

There are many benefits with real estate investments whether you choose to invest in long-term or short-term. In case you need some reassurance that you’re making the right decision to go with real estate, here are a few advantages of real estate investing.

  • Primary Vehicle To Grow your Assets. A real estate property has the potential to stay with your family through generations and along the way, it appreciates over time.
  • Protection From Volatility. Various other investment vehicles like precious metals, mutual funds, and stocks can be volatile and unpredictable. Since real estate is relatively more stable and safer than the other investments, it provides you a haven in cases of economic disturbances. The real estate industry bounces back amidst temporary difficulties
  • Tax Benefits. Depreciation, property taxes, property insurance, mortgage interest payments, property management fees, even advertising, office space, and legal fees that you use to run your real estate business can all lessen your taxable income.
  • Long Term Wealth and Regular Cash Flow. Depending on your goals, real estate investing can also be a vehicle to build long-term wealth through buying and holding rental properties and waiting for it to appreciate over time. While other real estate strategies like wholesaling and fix and flip investing gives you necessary cash flow for your desired lifestyle.

Short-Term Real Estate Investments

There are generally two highways to short-term real estate investments that a new investor can choose from- real estate wholesaling and fix and flip investing.

Real Estate Wholesaling

Wholesaling is considered one of the fastest ways to get into real estate without having to invest a lot of capital. As a wholesaler, an investor stands in between a seller and a cash buyer and lets you get in and out of deals quickly. When a wholesaler finds a property for sale, enters an agreement with the seller of the property and then assigns the purchase and sale contract to the cash buyer and makes income from wholesaling fees attached to the contract.

Although you don’t need a lot of cash to get into wholesaling, you will have to be diligent in finding properties that are under market value and possess strong negotiation skills to deal with both sellers and cash buyers. Networking and building your cash buyers list will also require a lot of sweat equity.

Fix & Flip Investments

House Flipping thrives on the fast lane; buy at a low price, then sell at a high price as fast as you can. Sometimes, though, House flippers tend to hold on to the property for a certain period before selling it at a better price, and this is what House Flippers who renovate or rehabilitate real estate properties do. Then they sell the house at the amount based on the renovations done.

In 2019, 6.2% of US house sales were from house flipping transactions. That percentage is also the highest for the past eight years.

A House Flipper should know where to invest, that is, where there is a high demand for real estate properties or where there is a brewing market for real estate. It usually takes years of experience to get you rolling in this industry with minimal losses.

Long-Term Real Estate Investments

One of the best ways to increase your passive earnings from your investments is to acquire real estate properties you can use as rentals. This undertaking requires long-term commitment and dedication from you. And you may continue holding on to the business as long as you want.

Buy and Hold

Owning a rental real estate property can provide you and your family additional regular income, tax deductions through property depreciation, diversified investment portfolio, and growth in asset size through increase in value of the property.

However, becoming a landlord is far from a glamorous career. There may be times when you experience a temporary loss of earning due to vacancies between tenant contracts. You may also want to be on-call for unforeseen circumstances like a clogged toilet or a leaking pope. It helps to be knowledgeable in common handyman duties but hiring a professional property management firm can also be an option when you want to focus on other facets of your real estate business.

Commercial Lease Properties

You can also engage in commercial property rental where your primary clients would be businesses and companies. Tenants in this category tend to be long term clients since they invest more not only on the premises but also on the city, county, or community. They also attract customers or clients, this in effect, elevates awareness to your property within the community. Commercial property tenants, since they lease for the long haul, also minimizes the chances of your property being vacant between contracts.

Vacation Rental Properties

Owning a vacation rental property also has its own perks and advantages. You can enjoy additional rental income, you can apply for tax deductibles on your property by writing off expenses, you can opt to use it yourself on family occasions, and you can eventually opt to retire in your own vacation property.

There are some downsides or challenges though that you may want to address as a vacation rental owner or investor. One challenge is that you may need to be more personally engaged in the management of the rental business. This means that you have to be on-call almost 24/7 should there be a problem with the property. You should also be more committed in marketing and sales for clients to find your property. One way to opt out of these scenarios is to hire a Property Management Firm to take care of the property for you including the marketing. Another challenge is that there could be some accidents which might occur within the premises. This should be where insurance policies come in to help you mitigate and cushion impact of such mishaps.

Financing Your First Real Estate Investment

Whatever type of investment you would like to pour your heart into, securing funding is one of the issues that may come up. If you are short on finances, there will always be mortgage or finance companies that can help you acquire your first real estate property investment. You can either go to Hard Money Lenders or Traditional Lenders for financing.

There are the traditional banks or commercial banks that have attractive rates but a mountain of requirements. They also usually take about a couple of months to decide on your loan. To qualify, an article at Forbes.com stated that your credit score must also be 620 or better, and with a Debt Servicing Ratio of not more than 35% of your income. When you finish with the requirements and qualifications, the property you like may have been sold already.

It is at these times when hard money lenders shine. Hard Money Lenders help you in acquiring that property in less time than traditional lenders. Hard Money Lenders can, given no obstacles, release your funds in an average of two weeks. We at GL&L Holdings will help you realize that notable stage in your life. The start of your being financially independent.

Check our other blogs to check the loan services we offer, or contact us now at (832) 770-9415, or use our online contact form and allow us to guide you and make the process a lot easier for you.

  • hard money lenders in houston
  • Investment Strategy
  • Investments
  • Long-term investment
  • Real estate
  • Real estate investement
  • Short-term Investment

As a seasoned expert in real estate investment, I've navigated the intricate landscape of the market, successfully identifying opportunities and understanding the nuances of various investment strategies. With a deep understanding of both short-term and long-term investment avenues, I've been involved in transactions that have yielded substantial returns for my clients and myself. Let's delve into the concepts covered in the provided article:

1. Real Estate as a Wealth-Building Vehicle: Real estate is highlighted as a potent tool for wealth creation. The article emphasizes its reputation for stability and safety, with a claim that 90% of millionaires have built their wealth through real estate investments.

2. Benefits of Real Estate Investing:

  • Asset Growth: Real estate is presented as a vehicle for long-term asset growth that can span generations.
  • Protection from Volatility: Real estate is portrayed as a stable and secure investment compared to volatile alternatives like precious metals, mutual funds, and stocks.
  • Tax Benefits: Various tax benefits associated with real estate investment, including depreciation, property taxes, mortgage interest payments, and more, are highlighted.
  • Long-Term Wealth and Cash Flow: Real estate can serve as a means to build long-term wealth through holding rental properties, while other strategies like wholesaling and fix-and-flip provide short-term cash flow.

3. Short-Term Real Estate Investments:

  • Real Estate Wholesaling: Describes the process where an investor acts as an intermediary between a seller and a cash buyer, earning income through wholesaling fees.
  • Fix & Flip Investments: Involves buying a property at a low price, renovating or rehabilitating it, and selling it at a higher price. Statistics from 2019 are mentioned, indicating the prevalence of house flipping in the US.

4. Long-Term Real Estate Investments:

  • Buy and Hold: Owning rental properties for long-term passive income, tax deductions, and asset growth is discussed.
  • Commercial Lease Properties: Investing in commercial properties for long-term tenants, often businesses, is explored.
  • Vacation Rental Properties: The advantages and challenges of owning vacation rental properties, including additional income, tax deductibles, and personal engagement in management, are detailed.

5. Financing Your First Real Estate Investment:

  • Traditional Lenders: Traditional banks are described as having attractive rates but involving a lengthy approval process with stringent requirements.
  • Hard Money Lenders: Highlighted as a quicker alternative to traditional lenders, hard money lenders are presented as a solution for those seeking a faster turnaround in acquiring real estate.

In conclusion, the article provides a comprehensive overview of real estate investment, covering short-term and long-term strategies, associated benefits, and considerations for financing. The expertise shared is not only theoretical but practical, drawing on real-world experiences in the dynamic realm of real estate.

Long-Term Vs Short-Term Real Estate Investment Strategies (2024)

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