REAL ESTATE STRATEGIES DESIGNED FOR INVESTOR SUCCESS
It is important for investors to understand the risk and return relationship when discussing the four different types of real estate investment strategies. The level of the return should be commensurate with the amount of risk. Whichever strategy you choose, Ellie's keen sense of the market and her investment background is critical to the execution and success of your strategy.
For the homeowner that is adverse to risk, this homeowner should invest in a primary home that is a core asset. Core properties are usually best-in-class properties located in prime locations, with high and stable appreciation rates. These homes can be more expensive than others, but in an economic downturn, these homes are least to be affected. Since this is a primary home, there is no risk of tenant vacancy losses.
Opportunistic investors take a bigger step out in the risk-reward line. In addition to purchasing core assets, this investor may purchase an older property at a discount with the goal to renovate and resale. The investor has now turned a value-added home into a core property. With a well-executed strategy, the return on investment can be rewarding.
Moderate risk investors occupy the next rung in the risk ladder. These homeowners may share many of the same characteristics with Conservative homeowners with one or more exceptions that create added risk. Some examples might include ownership of a primary home and a rental home, or trading-up every few years to create increased wealth.
Aggressive investors are at the top of the risk ladder. Not only do they acquire core assets and value-added assets, these investors take further risks acquiring distressed properties which may have major problems to overcome such as structural or financial issues. Aggressive investors may acquire foreclosure or auction properties. Because these investments carry the highest risk and require the greatest expertise, the return on investment is very high.