REITS vs Buy & Hold vs Fix & Flip: Which Investment Is For You?

If you’ve been looking into real estate investing lately, then you’ve probably heard about the 3 most popular options: REITS, Buy and Hold, and Fix and Flip; the question is, which one is right for you? The good news is that there’s no “wrong” answer here. Each strategy has the potential to yield positive returns. Ultimately, it comes down to your goals and personal tolerance for risk. That said, each strategy can certainly suit specific types of end goals better than others. Here’s the breakdown.

Real Estate Investment Trusts (REITS)

REITS are real estate management companies that buy, hold, and/or sell an array of real estate properties. These can be residential homes, commercial buildings, or both. Some of the big names in the REIT business are Simon Property Group and Public Storage. While you can invest with those companies directly, you don’t have to. REITS can be bought on a per-share basis as an ETF, or as a mutual fund with a minimum initial deposit. REITS are great for beginners because you can get real estate exposure for as little as the price of 1 share. Since REIT companies are required to pay dividends on their portfolio, you’re pretty much guaranteed some type of return from them.  

Buy & Hold

Simply put, buy and hold means that you buy a property and hold onto it. This is generally done so that you can rent it out to tenants. Buy and hold properties can provide both short term and long-term returns. While seasoned investors are more likely to leverage these opportunities, remember that it’s not hard to get started. Everyone was a beginner at one time or another. If you’re looking to secure some long-term, liquid returns, then buy and hold investing is one of the smartest choices you can make. 

Fix & Flip

Fix and flip means that you buy a property to fix it up, and then sell it for a profit. Fix and flip is generally considered a short term investing strategy. Your goal is to get the property ready for the market so that you can profit from it. While it may sound attractive, you shouldn’t invest in fix and flip properties unless you have a plan in place. When looking at fix and flips, make sure that you know how many repairs are needed, how long it will take to get them done, and how much it will cost; moreover, make sure you understand the market. If it will take awhile to actually sell, are you prepared to wait? 

Like we said earlier, there’s no wrong answer here. If you’re brand new to real estate investing, then give REITS a try. If you’re ready to generate immediate and lasting returns, then by all means, step into the buy and hold market. If you’re going that route, then you’ll need some capital. Fortunately, we can help with that. Sachem Lending provides private loans for new and experienced real estate investors. Interested? Give us a call.

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