Many people are interested in investing in real estate, which can be a very lucrative proposition over the long term. However, before committing any money, it is a good idea to consider the various means by which investment in real estate can be made to choose the plan that best matches the individual’s goals.

Buy and Hold

This strategy is particularly popular among first-time buyers and involves the purchase of a property that is then rented out to a tenant to earn regular monthly rental revenue. Investors using this strategy often start with a single property before gradually expanding their rental property portfolio over time.

Experts in the real estate industry such as Ryan Mahoney of Dubai, UAE, can provide plenty of advice on the advantages and disadvantages of the buy and hold strategy. In general, the plus points include a consistent monthly income and the appreciation, over time, of the property. However, the fact that this strategy is an active (rather than passive) form of investment needs to be considered: the work required of a landlord can be significant.

Short Term Rentals

Similar to a buy-and-hold investment, a short-term rental strategy involves renting out property on a short-term basis. Vacation homes and leased flats are sometimes used as short-term rentals to generate revenue. The advantage of this is the flexibility it offers – an owner could use the property as a holiday home for a portion of the year, for example. The disadvantage of this strategy is that, inherently, it doesn’t offer as regular and consistent an income as buy and hold and carries the additional risk of having a higher number of people passing through the property.

Fix and Flip

A fix and flip investment strategy is where a buyer purchases a property, makes improvements and then immediately sells it on to make a profit. While a key benefit of this type of investment is that it allows for quick profits with no need for regular property maintenance, it tends to be a labor-intensive strategy. It’s also possible to lose money on a fix and flip by, for example, over-improving the property, making it impossible to recoup the investment made.

Take a look at the embedded PDF for information about the most important factors to consider when investing in real estate.