Do It Yourself with Active Real Estate Investing

While you can invest in real estate passively, it is usually more rewarding and fulfilling to take a hands-on approach. Active real estate investing promises better returns and you get to experience running a business from the front lines. It is the ideal investing strategy for people who choose to do this full time. There are numerous ways to do this.

Types of Active Real Estate Investing

While all types of active real estate investing share the hands-on approach as their common characteristic, they vary enough that there are options for investors of different preferences and capabilities. These types include:

House-Flipping

This is the most common form of active real estate investing, because it’s the easiest to understand: buy low, sell high. In between those two steps, you improve the property so it becomes appealing to new buyers, and then you try to sell it for the highest markup you are able to get away with. The main advantage of house flipping is the potential for high returns, but the downside is that it’s a short-term investing strategy, requiring an investor to repeat the process ad infinitum.

Renting Out the Properties

Similar to house-flipping, you buy a property and then improve it so that it becomes attractive. Except instead of selling the property and moving on, you just turn it into a rental. The downside to this strategy is that the returns are small at first. On the otherh and, it is a long-term sustainable stream of revenue. If you play your cards right, you can have multiple streams of income going on at the same time. What prevents renting out properties from being a passive investing strategy is that you have to styay on top of things, maintaining your properties and addressing your renters’ concerns about the house.

Airbnb

This is an offshoot of renting out properties. Instead of doing everything yourself, you just join the company AirBnB and have your property available on their service as an alternative to hotels. The company lets residents rent out their homes on a nightly basis, but there’s nothing preventing property owners from joining their service. The downside is of course, they get a cut of the proceeds. The advantage of this approach is that Airbnb handles everything. You just focus on making your property suitable for living. This is the appoach that requires the least amount of effort and expertise.
Keep in mind that active real estate investing is not exclusive, and there’s nothing preventing you from investing in more passive ways. But when starting out, choosing an active strategy is good because it helps you learn the nitty-gritty of the industry, and provides the path with greater potential returns.