If you’re like many people who want to buy a duplex, triplex or fourplex in Silicon Valley because you know that you’re likely to earn a good amount of money on it, congratulations – you’re making a big decision that can really pay off in the end. However, if you’re new to real estate investing, you should have a strategy in mind. Specifically, you need an investment strategy. But what is an investment strategy, and how do you know which one is right for you?
This guide explains.
What is an Investment Strategy?
An investment strategy is a detailed plan to earn income through your investments. You’ll need to develop your own investment strategy after considering your goals, risk tolerance, financial health and needs.
Different strategies require different amounts of capital – and different levels of personal involvement.
Common Investment Strategies
The six main investment strategies are:
- Short-term. These investment strategies are designed to provide results within about three years. One of the most common ways people use short-term investments to make money is by flipping properties.
- Long-term. Long-term investment strategies take years to realize their potential. Generally, these strategies include buying a house and renting it out or later – after at least five years or so – selling it.
- Active. Active investment strategies require you to use a significant amount of your time and resources. Flipping houses, particularly when you’re very involved in the process, is one example of an active real estate investment strategy.
- Passive. Passive investment strategies let you relax a little while you gather profits. For example, if you buy a property, hire a property manager, and rent out units, it’s a passive strategy. Your day-to-day involvement is a lot less significant than it would be with an active strategy.
- High-risk. Risk is important – and without it, there are no rewards. (There are also no losses.) High-risk investment strategies are not right for everyone; they’re only right for people who can afford to lose. Flipping a house with all your own money is an example of a high-risk investment; in many cases, flipping a house with someone else’s money is also a high-risk investment.
- Low-risk. Low-risk investment strategies are a great place to start. You’ll be able to see some sort of return without jeopardizing your ability to survive. One example of this is buying a duplex, triplex or fourplex and living in one unit while renting out the other(s).
You can blend and combine each of these strategies to develop a plan that’s right for you.
Related: How to sell a duplex fast
How Do You Know Which Investment Strategy is Right for You?
If you’re a beginner, most experts will recommend that you try a low-risk, long-term, passive investment strategy to begin to build your empire. You don’t have to put everything on the line; like everything else in life, biding your time and learning about the industry can really pay off.
To settle on the right investment strategy, you should evaluate your current financial situation, your anticipated future financial situation (such as whether you’ll be able to keep your job or count on retirement pay), your tolerance for risk, and your ability to involve yourself in your investments.
Are You Buying or Selling a Duplex, Triplex or Fourplex in Silicon Valley?
If you’re selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Call today or fill out the form below to find out about our innovative marketing plans that can put your investment property in front of all the right buyers.
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