Real Estate Investment Strategies for Beginners

Real estate investing is a great way to build wealth if you know where to start. For example, do you want to flip houses or buy a turnkey rental, or look into new construction? The answer is to follow an investment strategy that best aligns with your budget, skill set, housing market, risk tolerance, and long-term goals.

If you don’t know we’re to start, our beginner’s guide to real estate investment strategies could be exactly what you’re looking for. At ABL, we’ve helped countless new investors start their real estate journey with fast, flexible property financing and expert guidance at every step. Our goal is to build a long-term relationship with you to help maximize your real estate investing returns.

Types of Real Estate Investment Strategies

Here are some of the most effective real estate strategies for first-time investors:

Buy and Hold

Buy and hold is a time-tested strategy that involves buying a property and holding onto it for the long haul. With buy and hold properties, you are purchasing a property, completing necessary renovations, and managing the property as an asset collecting rental income. The goal here is to make sure your monthly costs are less than your collected rents, resulting in positive cash flow. These properties are in investment that can be a “cash-cow” for investors, allowing you to benefit from regular rental income and appreciation over time.

Unlike a fix and flip where the property is bought and sold quickly for a profit, buy and hold investments produce cash flow at a slower rate, but can be extremely profitable in the long run. However, if the property isn’t managed well, pitfalls like maintenance or tenant issues can end up eating away at profitability.

With a rental loan from Asset Based Lending, you can amplify your returns with leverage. Unlike traditional lenders, we qualify you based on the deal more than your credit history, making it easier for beginner investors to get started.

Fix & Flip

A Fix & Flip loan is a short-term loan for buying, renovating, and reselling properties. These projects are all about buying low and selling high. Typically, investors find distressed properties and renovate them to raise their value. It’s a great way to make a quick profit if you have the time and skill to do the rehab—or can hire someone to do it.

Unlike traditional mortgages, a fix and flip loan is designed for real estate investors and investment strategies. In fact, most conventional banks won’t finance a fix and flip because they’re bound by stricter lending regulations. However, you don’t need to wait until you have enough cash for the project. You can get an ABL Fix & Flip loan today and bring your investment strategies to life.

BRRRR

The BRRRR method stands for “buy, rehab, rent, refinance, and repeat.” This real estate investment strategy like a fix and flip, except you rent out the renovated property instead of selling it. Then once renovations are complete, you get a cash-out refinance to pull out the sweat equity you put in. Ideally, this gives you enough cash for a down payment on another property, so you start the process over again.

A method that’s both manageable and scalable, BRRR aims to create a long-term, reliable source of cash flow while benefiting from general property appreciation as you hold the home while renting. Likewise, you can execute the playbook on multiple properties simultaneously once you have some experience and are comfortable growing.

Overall, BRRRR investing is a great way to grow your portfolio fast, but it requires having a lending partner like ABL to seamlessly transition from a bridge loan to a cash-out refinance loan.

How to Get Started Investing in Real Estate

Now that you know the top beginner real estate investing strategies, here’s how to get started:

1. Set Investment Goals

Clarify your goals and priorities in real estate investing. For example, do you want to preserve wealth you already have or grow your portfolio? Similarly, do you prefer passive rental income or a large windfall? From there, select an investing strategy that best aligns with your goals and risk tolerance.

2. Organize Your Finances

Before you buy real estate, you need to get your finances in check. This includes checking your credit score and ensuring you have enough cash for a loan down payment. You also need to form a limited liability company (LLC) to house your real estate investment(s). At ABL, we work with investors of all experience levels. If it’s a good deal, we’ll fund it!

3. Perform Market Research

Typically, real estate investors start in their backyard because it’s the market they know best. However, it’s still important to research which areas and neighborhoods offer the most return potential. In some cases, you may need to look beyond your local market. Either way, ABL has teams nationwide that know your market and can help get your first deal off the ground.

4. Find a Property to Buy

Shop for properties in your target market that meet your investment criteria—whether that’s a turnkey rental or a distressed fixer-upper. Start with properties listed for sale on the MLS and then explore off-market opportunities by driving for dollars, searching public records, and networking with other real estate professionals.

5. Secure Financing

Once you find a property to buy, secure financing. You can pre-qualify for an ABL loan in under 24 hours and close in as few as 20 days with our streamlined lending process. This is extremely valuable in real estate, where time is money. The longer it takes to get a property under contract, the more chance your competition will beat you to it. 

6. Close the Deal

After negotiating a favorable purchase price for the property, sign the closing documents and collect the keys. This is when your real estate journey really begins. You’ll either need to arrange property management for a rental or start construction for a fix and flip or BRRRR.

Tips for Long-Term Real Estate Investing Success

As you grow your real estate portfolio, here’s how to maximize your long-term returns:

  • Diversify your portfolio: Reduce your risk of loss by buying real estate across different property types and markets. In other words, don’t put all your eggs in one basket. 
  • Build a solid team: Surround yourself with real estate pros who can help you get deals done faster. Your team should include agents, contractors, and a lender like ABL. 
  • Have clear exit strategies: A plan B can save an investment if market conditions shift. For example, if housing values dip, know how to turn a fix and flip into a long-term rental.
  • Leverage financing: Partnering with a lender like ABL can enhance your returns by spreading your equity across more cash-flowing properties than you could on your own.

Common Real Estate Investing Mistakes to Avoid

That said, avoid these common pitfalls that beginner real estate investors often face:

Neglecting due diligence: Skipping property inspections, title checks, and a review of zoning laws can lead to serious problems down the road and ultimately hurt your ROI.

Underestimating costs: Be careful not to underestimate costs like property taxes, insurance, and regular maintenance. Otherwise, your return estimates could be inflated.

Doing it all yourself: Real estate is a team sport. While you might be tempted to do it all yourself, it’s unwise. A good network can help you grow and avoid costly mistakes.

Share Your Real Estate Investment Strategy with ABL

Bring your investment strategies to life with Asset Based Lending. Whether you want to buy a long-term rental or fund a fix and flip, we’re ready to work with you. Our experienced local teams can walk you through the entire investment process—from setting your investment goals to securing financing to closing the deal. With over 10,000 projects funded, Asset Based Lending has the experience and capital you need to scale your success.

Ready to take the first steps? Get started today by filling out our pre-qualification form! It’ll take less than five minutes to submit, and one of our loan experts will follow up with you in a day or two. If you’re deal is a right fit for ABL, we’ll discuss next steps and work with you every step of the way—and then you’ll be closing in as few as 20 days!

The best deals don’t wait, and you deserve a hard money lender that works as fast as you do. Pre-qualify with Asset Based Lending now to get started.

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