Real Estate Investing: Short Term VS Long Term

Real Estate Investing: Short Term VS Long Term

Oftentimes, many investors ask me what I think is the best strategy when it comes to short term versus long term real estate investing. My answer always is based on what each investor's end goal and preferences are.

With short term investing, your goal is to usually flip a property for a certain profit amount within a year or so timeline. This strategy carries wholesaling and fix and flips under its belt.

However, with long term investing many investors tend to keep their properties for more than a year. This typically means that there will be some kind of passive income, growth and/or appreciation that builds over time. The main strategy used is called Buy and Hold, which refers to rental properties.

Short Term Investing

With this strategy your main goal will be to try and create quick cash flow (wholesaling) or by gaining a larger profit later on with a hefty chunk through fix and flipping a property.

What is wholesaling exactly?

It’s a strategy that tends to attract new investors that are just starting out. This tends to be a great route because it teaches those investors the business without requiring a lot of financial resources to get started.

Whereas with fix and flips, more experience is required within this field and finances too. Some investors are able to even borrow money through private or hard money lends to help fund their projects if they do not have the full funds of their own.

Long Term Investing

This is the alternative to short term investing. This strategy is used when an investor is looking to build long term passive/secondary income; focusing on long term appreciation and cash flow as opposed to a large profit gained later on in the future.

Whether you are new to the business or have been investing for some time, this is a great strategy to use. When I first started out, I worked with buy and holds since I was looking to replace my main source of income. It helped me generate a monthly cash flow, enough to where I was able to quit my corporate job.

One of the biggest misconceptions about using the buy and hold strategy is that when you’re starting out you’ll need to have a good credit score and capital to use up front. This fortunately, is not the case as I started out with no money and didn’t have to rely on my credit.

Which is better? Short Term or Long Term Investing?

It honestly just depends on the type of investor you are or want to be.

What’s your end goal? Is it immediate large chunks of cash or is it recurring reliable income?

Are you just starting out in this career? Might you have the finances available or construction experience that you can use to help leverage your profits?

You always want to make sure you’re considering the knowledge and skills needed as well as having the financing options available.

If you have the knowledge and no capital, your skills can help make up for the resources you lack. The same works if you have the capital but not the knowledge/skills.