With so many options and strategies to consider, it is challenging to determine which approach is best for your specific goals. Before diving into various real estate approaches, get very clear on what your motivations and end goals are. Do you want to purchase property as a long-term investment to generate ongoing passive income? Are you interested in house flipping to turn quick profits? Is your priority to build a large rental property portfolio? Outline exactly what you want, so you match strategies directly to your goals.
Consider your commitment level
Some real estate methods require significant hands-on work and time commitment, while others are more passive in nature. If you have limited time and prefer taking a more hands-off approach, strategies like turnkey rentals or REIT investing may be a better fit versus active house flipping. Be realistic about how much effort you can dedicate so you can pick strategies aligned with your preferred commitment level. There is inherent risk involved in any real estate strategy, but some options pose more potential sides. If you are risk-averse, approaches like buy-and-hold investing in tried-and-true markets may be better suited than speculative flipping or buying pre-construction condos. Know your appetite for risk before selecting a real estate game plan.
Factor in your current resources
Honestly assess your current financial situation and real estate knowledge when weighing options. Factors like your available capital, financing capabilities, and skill sets will determine which methods are feasible. For example, fix-and-flip projects require substantial upfront funding and renovation skills. Make sure to pick strategies accessible within your means. Once you have a clear picture of your goals and capabilities, dive into researching popular Illinois Real Estate MLS approaches.
- Buy-and-hold – Purchasing property to generate rental income long-term
- Wholesaling – Finding discounted properties and selling contracts to buyers
- Fix-and-flip – Buying, renovating, and quickly reselling for profit
- Rental property investing – Owning and managing rental units
- REIT investing – Investing in real estate trusts that own properties
- Turnkey rentals – Hands-off rental properties managed by a company
Look at the pros, costs, and time commitments involved with each. Also research which lending options like conventional, hard money, or private loans can facilitate different tactics. Get very familiar with how each strategy works.
Consult investment property specialists
Connect with real estate agents, investors, lenders, and tax experts in your target market. They provide invaluable insights about which strategies are best suited to different goals, market conditions, property types, and investor profiles. Their perspective and experience help you zero in on appropriate options. Thoroughly analyze metrics and trends in any real estate markets you are considering investing in. Factors like housing costs, appreciation rates, cap rates, demand, and inventory will differ significantly between markets. Crunching the numbers for your target area reveals which strategies have traditionally performed well and make the most sense in that locale. After selecting your real estate investment strategy, create a step-by-step action plan to execute it. Outline the specific properties, market areas, financing methods, vendor teams, and exit strategies you will pursue. Building a detailed, concrete action plan increases your odds of successfully implementing your chosen approach.
