Short Term Investing versus Long Term Investing
Before we can answer what’s better short term real estate investing versus long term real estate investing, we have to define what each strategy looks like. Once you understand each strategy, you can determine which strategy is best suited for you.
You’ll learn the following strategies:
What strategies are involved in short term real estate investing?
Short term investing, as its name suggests is investing for the short term. The goal is often to flip a property for a certain amount of profit within a short period of time. Wholesaling and fix and flippings are usually the method of investing for the short term.
Wholesaling is a strategy that is very attractive to many new investors. You don’t need to have any capital of your own, you just need to put in sweat equity into your business. This is an easy way for you to get started. Many people start off wholesaling to get a taste of what real estate investing is like and if it’s something they enjoy.
Fix and flips is an investing strategy that will require financial resources. If you don’t have the financial resources to buy and flip properties, you can always borrow money through private or hard money lenders. This makes sense if you do the math right.
What strategies are involved in long term real estate investing?
Inversely, long term investing is investing for a long period of time. Investors will usually keep their properties so that they can earn passive income while the investment appreciates and earns more equity. This is often associated with buy and hold strategies, with the goal of renting.
Buy and hold strategy is where you purchase a home and you hold it for a long period of time. This is where you can have more opportunities to make money on a real estate investment. This strategy allows you to create passive income, in the form of rent. After some time, equity will have been built and you can sell to make more profits, if the housing market has been kind to you.
The biggest misconception is that investors think that in order to employ this strategy, they will need a lot of money and good credit, fortunately this is not true. You can purchase homes with as little as 1% down and in some cases and do not need to run your credit. If you’re interested in this strategy, I recommend you learn more about my Investor kit.
Short term or long term investing?
This is going to be a personal decision. What works for someone else may not necessarily work for you and your unique circumstances. Keep learning, find a coach, and maybe after some experience, you’ll find a good mix of what will work for you.