Do you know what my favorite real estate investment strategy is?
There are many ways to invest in real estate. Such as buying pre-construction condos, resale condos, you can buy a duplex, a triplex, a multiplex. You can severe lots. You can buy a single family home, break up the lot and then develop two houses. You can flip homes. And there's many other ways such as becoming a lender yourself and lending money to real estate investors.
My favorite real estate investment strategy is BAR which stands for buy, add and refinance.
Here's how it works.
STEP 1 Buying a property that needs renovations or has the potential to add an additional unit. So for example a semi-detached single family home that you can add another basement unit to create a duplex out of that single family home or a duplex that you can add a third unit to convert it to a triplex.
Step 2 Renovating the property to improve the quality of the finishes and or add that additional unit. So going from a single family to duplex or duplex to triplex.
Step 3 Once the tenants have moved in and are now paying higher rents, refinance the property to recover the majority or all of the renovation money that was put into it.
There are three reasons why this strategy works well.
By renovating the property, improving the quality of the finishes and or adding a second or third unit, the property value increases.
Having a higher quality finish and an additional unit improves the cash flow and the revenue for that specific investment property.
Set Up For Next Investment Property
Having strong cash flow makes it easier to qualify for the next investment property purchase.