Published November 9, 2023. Updated October 2, 2024.
Creative real estate investing is an innovative way to make money through buying, selling, or managing properties. It can be an excellent alternative for those real estate investors who have been learning how to create wealth investing in real estate with traditional methods but are looking for new strategies.
Today our Seattle property management experts will give some tips on starting a real estate portfolio using creative and innovative strategies!
There are many different ways to invest in real estate, including house hacking, wholesaling, crowdfunding, and renting-to-own. It's essential to learn about these real estate strategies before deciding which one is best for you.
Rent-to-own is a popular investment strategy that has both pros and cons. With a rent-to-own property, investors rent the property for a set amount of time, with the option to buy it at the end of the term. This type of arrangement is beneficial for both the seller and buyer. The seller knows they will get their asking price plus a premium, and the buyer can afford to purchase the home over time.
When it comes to real estate investing, many people think of banks and loans when they want to buy a rental property. However, there is another way to secure funds to invest: seller financing.
Seller financing is an agreement where the seller agrees to let the buyer pay for the purchase price in monthly installments. This option can be more streamlined than a bank loan, as there can be less paperwork to complete, and it can be more flexible. The investor agrees to pay the seller until the purchase is complete, often without the high-interest rates or other fees that come with traditional financing.
"House hacking" is the practice of purchasing a property and renting part of it out while living in another part of the home. This could include buying multifamily property such as a duplex, fourplex, or renting out rooms in your home.
While this is an excellent way to reduce expenses and live almost “rent-free,” there will be maintenance bills, taxes, closing costs, and other unforeseen expenses to be aware of. However, there's no doubt this method is a successful passive real estate investing strategy to save money while investing in real estate.
Wholesaling real estate is a strategy many investors use to generate additional income. Wholesalers start a contract on a home, then locate another buyer to take over the contract before money changes hands between the seller and the wholesaler.
To make money through this strategy, buyers frequently pay a higher resale price than the initial quoted price, and wholesalers keep the difference.
Real Estate Investment Trusts (REITs) are another way to get into real estate as a truly passive real estate investment strategy. REITs are entities that buy and manage properties, then offer shares to investors. These can be private or publicly traded, and they work like stocks but differ in several respects.
Investors purchase shares, then the REIT pays dividends to investors depending on the returns from the managed properties. It’s important to note that the share prices do not necessarily move in sync with the market, so buying them is often a stable long-term investment. In addition, REITs commonly pay higher dividends than other publicly traded stocks, so keeping them in your portfolio can be very profitable.
Investors can typically invest in a REIT without making a significant investment, and they don't need to manage properties to collect dividends.
Crowdfunding allows multiple real estate investors to pool money together to invest in properties, often through online platforms. The idea behind crowdfunding is that if enough people contribute small amounts of money, they can collectively buy property at a much lower investment buy-in than they could individually.
These investment opportunities can include the construction of new housing and partial ownership in existing shared holdings.
In addition to the strategies we’ve mentioned, finding highly motivated sellers can also be a creative (and successful) strategy for building a rental property portfolio. Homeowners motivated to sell a house quickly often compete against multiple offers from buyers who are willing to pay top dollar. A savvy real estate investor knows how to identify these motivated sellers and get their attention.
The key to finding motivated sellers is to market quickly to those ready to move. Make sure to network with local real estate investors and do your research to find deals before others.
If you're looking to invest in real estate, Seattle is an excellent market! With the best property management Seattle offers, investors can build portfolios and experience more success.
Real Property Associates offers residential management services to boost your investment’s success long-term. Our team of experts has years of experience managing properties, and we have the resources necessary to optimize returns. Contact us to find out more about our services!
Get more professional advice on how to succeed as a real estate investor! Download "How To Invest in Real Estate Guide" for free.