Key Takeaways
- Advanced strategies like BRRRR, portfolio financing, and geographic diversification help investors scale efficiently while managing risk through systems-oriented approaches.
- Hard money lenders provide 10-14 day funding versus 30-60 days from traditional banks, with flexible underwriting and customizable terms that enable faster deal execution.
- Strategic partnerships and syndications allow investors to pool resources and expertise, while clear exit strategies like 1031 exchanges and cash-out refinances maintain investment momentum.
- Legal structures such as LLCs and trusts protect personal assets and simplify portfolio management as investors transition to larger multi-unit properties.
Real estate investment strategies are key to growing your portfolio successfully. These days, you’ll need to consider more than just the traditional methods of buying, reselling, or holding properties. Successful real estate investors use data-driven methods to identify and manage risk, as well as diversify across markets and asset types.
As real estate investments have grown more complex, less traditional methods of financing have become increasingly popular and necessary. Hard money lending, for example, offers more flexibility and faster funding speeds that few traditional banks can match. As a result, investors can secure and close on deals more quickly.
This article explores advanced strategies for real estate investment, such as buy, refurbish (or rehab), refinance, rent, and repeat (BRRRR) and portfolio financing. Integrating these into your own strategic planning can allow you to identify more opportunities, reduce risk, and maximize returns.
Strategy Matters in Real Estate Investing
Implementing the right real estate investment strategy can help you stand out as a successful investor and scale effectively.
Strategies must balance the ability to identify opportunities with managing the risk of potential returns. And, scaling long-term can otherwise be challenging without the proper planning for capital structure, access to funding, and risk management.
Instead of simply buying and holding real estate, you should focus on building systems with long-term growth in mind.
Some investors have found that pursuing more deals can stretch them thin and increase risk exposure. But done correctly, building toward long-term growth can actually strengthen your portfolio without adding much material risk. And by having quick access to funding, you can make sure you don’t lose out on opportunistic transactions.
Key Real Estate Investment Strategies for Experienced Investors
Seasoned investors may know that long-term growth requires more than the ability to just buy properties. You must factor in scalable growth. You should consider advanced strategies like portfolio financing, leveraging capital, BRRRR, and diversification.
These strategies can help you expand efficiently and intelligently, without expending too much capital or taking on too much risk. Done correctly, you can even use these strategies to uncover new markets and enhance profitability.
Unlocking Growth With Portfolio Financing
Portfolio financing can give real estate investors the ability to use a single loan to finance multiple properties. This is especially useful if you manage large portfolios of properties. It can simplify finances and administrative overhead since it eliminates the need to track multiple mortgage payments.
It can also allow you to secure more favorable loan terms. In comparison to traditional financing, portfolio loans can even save time, as they streamline underwriting processes. This can enable you to expand and close deals even more quickly than individual financing would otherwise allow.
Portfolio financing is an effective strategy for refinancing, consolidating debt, and freeing up liquidity to be used on new deals. This type of financing is offered by many hard money and private lenders.
Leveraging Capital for Faster Growth
Leverage is a controlled way of borrowing money. The funds are then used to generate a larger amount of returns with minimal risk. That said, leverage is dependent on fast funding speeds and flexible approval criteria and loan terms.
This means private and hard money lenders tend to be more favorable when compared to traditional lenders. Through private and hard money lenders, you’re more likely to move quickly and acquire deals traditional banks would not finance.
Traditional loans may offer more competitive interest rates and fees. But, hard money loans can prevent you from losing the ability to secure a highly profitable real estate investment.
The potential returns could far outweigh any savings obtained from a lower interest rate. However, some investors do use a combination of traditional and hard money financing to maximize profitability.
Scaling With the BRRRR Strategy
The BRRRR strategy involves buying, renovating, refinancing, and renting property and repeating those steps with another piece of real estate. It is one of the more popular methods used by investors to build wealth.
The properties being obtained are usually in a condition not suitable or eligible for traditional bank financing. So, BRRRR typically relies on hard money financing to provide the funding needed to renovate, stabilize, and turn the property into a viable long-term rental.
Scaling BRRRR requires the ability to manage multiple projects simultaneously. This requires:
- Expertise in managing budgets.
- A team of reliable contractors.
- Financing partners who can provide funding to cover unexpected expenses.
When managed effectively, BRRRR can provide a consistent stream of capital, which can further increase equity and income.
Diversification Strategies Across Markets
Real estate markets each have their own unique risks and opportunities. For this reason, experienced investors often diversify with deals in multiple geographic locations as a hedge against real estate market instability.
Each location may have its own nuances. So, investors look for indicators of a growing market, including strong job growth, favorable rent-to-price ratios, and population growth. Investing in emerging and undervalued markets also allows for smoother returns across economic cycles.
Partnering with the right hard money lender can be key here. They’re more likely to understand the importance of being able to provide quick access to funding.
Some may even provide resources you can use to analyze various market data, like employment trends and rental and new construction rates. Traditional banks, by comparison, may not have the resources or expertise to guide local market trends.
Transitioning to Multi-Unit and Mixed-Use Properties
While single-family rentals offer simplicity, expanding to multi-unit and mixed-use properties can significantly grow cash and equity. Having an understanding of SFR versus multifamily rent growth can highlight why this is the case.
Investors should be aware that these properties typically:
- Have larger down payment requirements.
- Need access to sufficient funding due to larger and more costly renovation needs.
- See greater competition, which further highlights the need for access to flexible funding.
Hard money financing can bridge all of those gaps. It provides short-term funding solutions to allow investors to acquire and renovate properties before refinancing them to permanent debt.
For example, an investor purchases a 20-unit building using a hard money loan to acquire the property. They also use the loan for repairs and renovations. Then, before paying the loan off, they replace it with a long-term debt-service coverage ratio (DSCR) loan once the property is stable.
Using Syndications and Strategic Partnerships
Forming partnerships or joining groups of other investors can allow you to share and reduce risk. You can pool capital, knowledge, and resources to close deals you otherwise wouldn’t have the capability of doing.
Forming a partnership with a hard money lender can give you access to a flexible and reliable source of funding. This can allow you to get the most suitable financing structure to accommodate contributions in shared ventures.
Many hard money lenders may also have teams of legal and tax professionals. In a partnership, you typically gain access to guidance from these professionals. For example, they can offer resources on maximizing profits while still ensuring compliance with tax rules and regulations.
Exit Strategies That Unlock Future Growth
Successful investors typically have a clear exit strategy in mind for when markets shift out of their favor. This enables them to quickly access equity for new opportunities. Some strategies to consider include:
- 1031 exchanges: Lets you defer capital gains taxes to preserve greater liquidity, which can be used to further grow profits.
- Cash-out refinances: Allows for equity to be converted into funds that can be used as capital, without requiring a property sale.
- Equity recycling: Allows you to use equity from a property to fund another investment without having to sell the property.
As with any exit strategy, timing is a key factor to success. A partnership with the right hard money lender can provide the financing needed to bridge the timelines between acquisition and resale. This can enable you to continuously invest and close deals.
Using Trusts and Legal Structures for Asset Protection and Legacy Planning
Trusts and legal structures, like real estate investment trusts (REITs) or limited liability companies (LLCs), can protect assets and simplify property management.
For example, using a trust or legal structure can help prevent your personal assets from being seized due to default. It can also streamline portfolio administration as investors acquire more properties, which can save time on tax reporting.
Trusts can further serve as a planning tool. This may eliminate the need to go through probate and allow generational wealth to be preserved.
Financing for Scalable Real Estate Investing Strategies
Finding suitable financing can have a critical impact on how quickly investors can grow. Compared to traditional banks, private lenders like LendingOne can minimize challenges related to loan requirements, funding speed, and underwriting flexibility.
LendingOne specializes in flexible financing solutions that can be tailored to each investor’s needs. This includes fast funding speeds, customizable loan terms, and flexible approval criteria. LendingOne can even assist with all types of investments, including BRRRR projects and portfolio financing.
To see the advantages and disadvantages of each lender type, below is a quick comparison of typical features.
| Criteria | Traditional Banks | Private Lenders |
|---|---|---|
| Funding Speed | 30–60 days | 10–14 days |
| Primary Underwriting Criteria | Income | Property and investor experience |
| Underwriting Flexibility | Limited | High |
| Amount of Required Paperwork | Extensive | Low |
| Customizable Loan Terms | Limited | Yes |
Final Thoughts on Real Estate Investment Strategies
Building a real estate portfolio with sustainable growth requires more than just the ability to identify good opportunities.
It’s essential to have reliable access to capital and the capacity to implement smart business strategies. This includes diversification, BRRRR scaling, engaging in strategic partnerships, or portfolio financing.
Beyond employing smart tactics, you’ll want access to the right financing partner that can offer the most suitable funding structure. LendingOne’s experience, nationwide funding abilities, and customizable loan programs identify it as a great fit for investors of all types.
Ready to move forward? Speak to a loan advisor to discuss how LendingOne’s solutions can fit into your investment strategies.
