Short Term vs Long Term Real Estate Investing
Real estate investors often ask me what is the best strategy: short term vs long term real estate investing. My answer is that it really depends on personal goals and preferences.
Short term real estate investing is about investing with the goal to flip a property for a profit in a year or less. Under this strategy, I include Wholesaling and Fix & Flip.
Long term real estate investing is referred to keeping a property for over a year, which usually means creating long term passive income, growth and appreciation. The main strategy to achieve this is Buy and Hold (rental properties.)
Short Term Real Estate Investing
Short term real estate investing is about creating quick cash flow (wholesaling) and/or getting a larger profit in the near future in a lump sum (fix & flip.)
Wholesaling is a strategy that attracts new investors, who want to learn the business or have limited financial resources to get started. Fix & Flip is more for investors who have some experience in the business and financial resources that they can leverage to borrow more money (through private or hard money lenders) or fund the project outright with their own funds. Visit JPR Construction if you’re looking for home design, consulting and many more.
Long Term Real Estate Investing
Long term real estate investing is the alternative to the short term real estate strategies: build long term passive or secondary income, with a focus on long term appreciation and cash flow instead of a larger profit in the near future.
This strategy is good for either a beginner or more seasoned investor. I personally started with buy and hold as a new investor, since I was looking for creating recurring income every month.
A big misconception about buying rental properties and creating long term real estate investing is that you need upfront capital or good credit. I personally started with no money or credit using creative financing strategies.
Which strategy is better – short term vs long term?
It really all depends on one thing: what type of real estate investor are you?
Are you looking for immediate cash in larger lump sums or recurring steady income?
Are you new to the business? Do you have financial resources or construction skills that you can leverage?
There are two sides of the scale to consider – knowledge/skills and financial resources.
If you have knowledge/skills and no financial resources, the knowledge/skills will compensate for the lack of resources.
The opposite is also true. If you have financial resources, but no knowledge/skills, you can leverage and “buy” the knowledge/skills to help you get going in the business.
We can certainly help you decide which is the best route for you and how to go about it.
Reach out to us and book a call so we can discuss your situation and give you valuable feedback.