Investing Strategies
What Are The Main Strategies?
When discussing the main strategies of investing there are multiple options. We can help you figure out which strategy works best for you and your investment.
Buy and Hold
"If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes." - Warren Buffett
This has been my favorite strategy and has been a staple for the properties in my portfolio. I still own the first home that I bought in 1992 today. My initial investment was $12,500 and I now collect twice as much as that in rent each year. The value has increased 400 percent and I have leveraged this property to build my portfolio. I like to think of this as the Shawshank redemption effect. If you haven’t seen the movie, I would suggest investing the 2 hours. It’s about a man who was convicted of killing his wife and gets a life sentence at Alcatraz.
He plans an escape that takes several years and it is a massive project. He slowly chips away at the project and in the end he makes his escape. It is a slow and even boring process, but by sticking with his plan, he is able to make his escape from jail. Of course he ends up in paradise, this is the movies after all. If you are able to think long term and can chip away at a mortgage, the returns in real estate can be incredible. If you are looking for a quick fix or quick return, stick to the casino for your investments.
Buy, Reno and Hold
“Price is what you pay. Value is what you get.” - Warren Buffett
This strategy is also good for a more sophisticate buyer. If you have some experience with renovations, you can buy a property, increase the value of the home and then hold it as a rental property. This strategy has worked well for me as well. Everyone wants to live in a freshly renovated home. If you have a new kitchen and a new bathroom, you will easily rent these properties.
One of the strategies in of the Boardwalk Real Estate REIT in the past year was to renovate some of their properties to increase the rents and lower their vacancy rate. The strategy has been successful and the stock price has increased since December 2017. I have also found this strategy to be successful. If you are handy and can do some of the work yourself, or if you are a good project manager, this may be a strategy for you.
Buy, Reno and Sell
“Risk comes from not knowing what you are doing.” - Warren Buffett
Many renovation shows are popular today. Masters of Flip, House of Bryan, Property Brothers, and the Scott Mcgillivray’s Income property, just to name a few. I do think that this type of strategy can work in some cases. In Canada it is more difficult to do as you don’t get the same discounts when purchasing as compared to the United States.
However, if you buy the right property in the right area and are able to do some of the work yourselves, this can be a successful strategy for investors. I would say that this is the highest risk strategy. Time is not on your side and the markets can turn during renovation. I would not suggest this strategy to a first time investor.