90 Ways to Invest in Real Estate

Strategy just means investment goal.
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We start with goals so we can work backwards to match our goals with appropriate tactics and assets.

Oftentimes folks take an a** backwards approach by starting with the asset they know and a tactic they’ve seen somewhere else.
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A** Backwards Example:
Asset: Raw Land
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Tactic: Ground-Up Development

Strategy: Capital Preservation

This goal’s risk profile (Low) does not match up with the tactic and asset risk profiles (High).
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Starting with the end in mind with a clearly defined strategy avoids those mistakes.

Focusing on the end goal limits options to the select strategies that fit the goal.

This focus allows you to choose the few sponsors who align with your goals.

Different strategies naturally fall into different categories, so we categorize them accordingly.

That said, there’s still ALOT of term overlap, but it’s crucial you know these when vetting sponsors as they will use them interchangeably.

With that, let’s dive into the strategies:

Wealth strategies

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1. Capital Preservation
This is a lower risk / lower reward strategy where the goal is to park money and seek a predictable return and cash flow.
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2. Capital Multiplication
This is a higher risk / higher reward strategy. The main goal here is to achieve large equity multiples rather than steady cash-flow returns.

Activity Level Strategies

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1. Active
This is hands-on, DIY investing. Meaning you source the deal, the capital, and the operations team to extract value from a property. This doesn’t apply to most passive investors.
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2. Passive
This is hands off investing. This means investing in syndications, JVs, Funds, or REITs. The passive label is only slightly true as a great deal of active work goes into sourcing sponsors, vetting them, and asset management.
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Asset Strategies

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1. Core
This strategy focuses on stable properties in strong Tier 1 metros. This is more of a wealth preservation strategy that emphasizes minimizing risk instead of multiplying returns.

‍Core Characteristics
- Prioritizes Cash Flow over growth
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- Stabilized properties

- Class A Buildings - Typically new build

- Primary Market i.e. Large Metro

- Long-term leases / Diverse Tenant Base / Fully Leased

-Low deferred maintenance

- Predictable Cash Flow

2. Core Plus
This is the core strategy, but with a value-add component. This is slightly more of a multiplication play, but with the downside protection of core characteristics.

Core Plus Characteristics
- Prioritizes Cash Flow over growth
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- All the above Core characteristics
- Plus a value-add component
     - Increasing Rents
     - Adding operational efficiencies
     - Additional income streams

3. Value-Add
This strategy involves acquiring a poorly performing property, improving it, and exiting at specified time.

Properties are considered ‘value add’ when they show management or operational problems, require physical improvement, or have capital constraints.

This is a capital multiplication play with a medium risk / medium return profile.

Value-Add Characteristics:
- Mix of cash flow and growth focus
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- In-place cash flow with potential for forced appreciation

- Physical improvements

   - Converting Class B to Class A

   - Filling 10 vacant lots

- Operational Improvements

   - Renting Vacant Homes

   - Increasing rents

   - Lowering operating expenses

- Short-medium-term loans
   - Typically, 3, 5, or 7 years

- Exit the property once property is stabilized

Example: Filling Vacant Lots with New Mobile Homes
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4. Opportunistic
This strategy involves properties that require a high degree of enhancement in order to cash flow.

Think ground up development with lots of red tape and uncertainty.
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This is a capital multiplication play and exhibits the highest risk / highest return profile

Opportunistic Characteristics:
- Similar to value-add, with more aggressive strategies and riskier properties
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- Limited or zero in-place cash flow

- Development or retrofit conversions

- Short-term, high leverage debt with higher interest rates
- 12-months, followed by a 3-year loan,followed by permanent loan

- High level of risk, high levels of returns

Real Estate Cycle Strategy

Whatever your strategy is, make sure it’s positioned for the cycle. If you don’t know where we’re at in the cycle, I highly recommend Howard Marks’ Mastering the Market Cycle (book) (free pdf).

Phase 1: Recovery
The recovery stage is characterized by a rebound from the previous downturn. Demand for real estate begins to pick up, vacancies decrease, and prices stabilize or start to rise. Economic indicators show improvement, lending becomes more accessible, and investor confidence grows.

Recovery Characteristics
- Declining Vacancy
- No New Construction
- Supply / Demand in our Favor
- Tactics: Higher Risk / Reward Profile
- Attitude: Aggressive

Phase 2:Expansion
During the expansion phase, economic activity gains momentum, leading to increased demand for real estate across various sectors. High levels of job creation, wage growth, and consumer spending drive property absorption, rent growth, and asset values.

Expansion Characteristics:
- Declining Vacancy
- No New Construction
- Supply / Demand in our Favor
- Tactics: Higher Risk / Reward Profile
- Attitude: Aggressive

Phase 3: Hyper Supply
The hypersupply phase is characterized by an oversaturation of the real estate market due to excessive construction and speculative activity during the expansion phase. Vacancy rates rise, rents plateau or decline, and property values may stagnate or decrease.

Hyper Supply Characteristics:
- Increasing Vacancy
- New Construction
- Supply / Demand Moving Away from our Favor
- Tactics: Medium Risk / Reward Profile
- Attitude: Cautious and Selective
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Phase 4: Recession
The recession stage represents a downturn in economic activity. Real estate markets experience decreased demand, rising vacancies, falling rents, and declining property values. Economic indicators such as rising unemployment, reduced consumer spending, and limited credit access contribute to the recessionary environment.

Characteristics
- Increasing Vacancy
- More Completions
- Supply / Demand Moving Away from our Favor
- Tactics: Medium to Low Risk / Reward Profile
- Attitude: Cautious and Selective

Before moving on to any of the below tactics and assets, review the above strategies. Once you’ve had a think, choose your goals and their corresponding strategies for your portfolio.
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From there, you can confidently move into tactics and assets and circle the ones that fit and cross off the ones that don’t.

Tactics are merely the methods we use to extract value from an asset.
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However, each tactic varies in its risk profile that doesn't match all strategies.

For passive investors, it’s crucial to understand the tactics that sponsors use to extract value from the asset.

We believe in aligning goals with specific tactics which suit those goals.

Choosing a tactic before an asset, eliminates assets that don’t match your criteria, and creates further specificity.
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At the core of many tactics lies these two processes:

Acquire → Enhance → Exit
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Acquire → Enhance→ Hold

That’s it…full stop.

Most tactics are the above stages but with a catchy marketing title.

All that said, below are the tactics for you to watch out for in the real world
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Raw Land Tactics

- Entitlement Flips
- Ground-Up Development
- Wetland Creation
- Land Banking

Built-Environment Tactics
- Value-Add
- Long-Term Rental
- Live-in-Then-Rent
- House Hacking
- Fix and Flip
- BRRR
- Short-Term Rental (STR)
- Wholesaling / Birddogging

Raw Land Tactics

1. Entitlement Flips
Entitlement Flips involve acquiring properties with the intention of obtaining necessary land use entitlements and approvals, then selling the property to another party. Entitlement flips often require navigating local zoning and regulatory processes to change or establish land use permissions.

2. Ground-Up Development
Development refers to the process of creating, constructing, or improving real estate properties to enhance their value and utility. Real estate development encompasses various stages, including land acquisition, feasibility studies, design, construction, financing, and often involves obtaining permits and approvals from regulatory authorities.

3. Wetland Creation
Wetland Creation involves the intentional design and construction of new wetland ecosystems in areas where wetlands did not previously exist. This process aims to establish functional wetland habitats that support biodiversity, water quality improvement, and specific species. Once functioning, an acre of habitat becomes a ‘credit’ which can be sold to developers to mitigate project impacts.

4. Land Banking
Land Banking refers to the practice of acquiring and holding undeveloped land for future development or investment purposes. Investors may purchase land with the expectation that its value will appreciate over time.

Built Environment Tactics

1. Value-add‍
As mentioned above, this is a bit of a catch-all term for acquiring a property, enhancing it, then capturing the forced appreciation either through a refinance or a sale.

2. Long-term Rental
This refers to the strategy of purchasing a property, doing light enhancements, and then leasing it out to tenants for an extended period, typically one year or more.

3. Live-in-then Rent
This is a strategy where an investor buys a property as a primary residence, lives in it for a period, and later converts it into a rental property when moving elsewhere.

4. House Hacking
This involves living in a multi-unit property and renting out a portion to offset living expenses. This can be any multifamily property but usually occurs in a fourplex, triplex, or duplex.
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5. Fix and Flip
This variation of value-add is a short-term investment strategy where an investor purchases a distressed property, renovates it, and then sells it quickly for a profit.

6. BRRR
This variation of value-add strategy involves buying a distressed property, rehabilitating it, renting it out, and then refinancing to recover the invested capital.

7. Short-term rental (STR)
STRs refer to renting out a property, typically residential, for short durations, often through platforms like Airbnb or VRBO.

8. Wholesaling (Bird-dogging) / Contract Flipping
Wholesaling involves contracting to buy a property and then assigning or selling the contract to another investor, usually for a fee. Bird-dogging is similar but involves locating properties for other investors.

Go through the above tactics and choose the ones that match your goals and personality.

Example 1:
Long on time, long on capital, and higher risk tolerance? Invest with a sponsor who does ground up development.

Example 2:
Short on time, long on capital, and lower risk tolerance? Invest with a sponsor who only does Class A multifamily buy and hold in primary markets.
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You get the idea. This part is more values-driven over science. Many tactics can achieve the same goal, but it needs to congruent with your values.

With the conceptual stuff out of the way, you can focus on the (mostly) real world assets.
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Assets by themselves have little meaning unless they fit into a wider strategic and tactical context.
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Remember: Real Estate Assets are merely tools with which sponsors use specific tactics to achieve specific goals.

There’s one lesson you should leave with after reading this: Given the sheer volume of asset types, it’s unlikely that a sponsor is an expert in more than one.
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It’s unlikely that a sponsor operates both value-add mobile home parks and…industrial warehouse development.
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Choose a sponsor who focuses on one or two closely correlated assets.
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A closely correlated asset would be mobile home parks and self-storage.

With that, let’s dive in!
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- Single Family Residential (SFR)
- Commercial
- Industrial
- Retail
- Office
- Healthcare
- Special Purpose
- Workforce / Affordable Housing
- Hospitality
- Debt Investing

Single Family Residential (SFR)

1. Single Family Homes
Single Family Homes refer to stand-alone residential dwellings designed to accommodate a single household. These homes typically feature one living unit with private entry, kitchen, bathrooms, and living spaces.

2. Tiny Homes
Tiny Homes are compact, space-efficient dwellings characterized by their small size and minimalist design. These homes are built to maximize functionality while minimizing the environmental footprint.

3. Mobile Homes
Mobile Homes, also known as manufactured homes, are prefabricated dwellings built in a factory and transported to a designated site for installation. They are designed for mobility and can be placed in mobile home parks or on private land.

Commercial

Multifamily
1. Small multi-family (5 - 19 Units)

2. Medium multi-family (20 - 49 Units)

3. Large multi-family (50+ Units)

Industrial

Manufacturing
1. Heavy Manufacturing
- Heavy Manufacturing facilities are industrial properties designed for large-scale production of goods, often involving heavy machinery and specialized equipment. These facilities are typically used for processes such as metal fabrication, automotive manufacturing, and chemical production.

2. Light Assembly
‍ - Light Assembly properties are industrial spaces where products are assembled from pre-manufactured components. These facilities often involve less complex processes than heavy manufacturing and may include industries like electronics assembly or small-scale product manufacturing.

Storage and Distribution

1. Distribution Warehouse
- Distribution Warehouses are large-scale facilities used for storing and distributing goods before they are delivered to retailers or consumers. These properties are strategically located near transportation hubs for efficient logistics.

2. General purpose Warehouse
- General Purpose Warehouses are versatile industrial spaces that can accommodate a variety of storage and distribution needs. These properties are often customizable to suit the specific requirements of different tenants.

3. Truck Terminal
- Truck Terminals are facilities dedicated to trucking operations, including parking, maintenance, and loading/unloading of goods onto trucks for transportation. These properties play a crucial role in the logistics and supply chain industry.

Flex Space

1. R&D
- R&D properties are designed to facilitate research, innovation, and product development activities. These spaces are used by industries such as technology, pharmaceuticals, and engineering for designing and testing new products.

2. Data Center
- Data Centers are specialized facilities that house computer systems and networking equipment for data storage, processing, and management. These properties are critical for hosting digital services and managing large volumes of information.

3. Showrooms
- Showrooms are commercial spaces designed to display products and services to customers. These spaces are commonly used by retail, automotive, and design industries to showcase offerings to potential buyers.

Retail

1. Lifestyle Centers (Outdoor Shopping Mall)
These are retail developments that emphasize open-air layouts, aesthetic design, and a focus on creating a pleasant shopping experience. These centers typically feature a mix of retail, dining, entertainment, and communal spaces.

2.Indoor Shopping Mall
Indoor Shopping Malls are enclosed retail complexes housing a variety of stores, services, and amenities under one roof.

3. Free Standing Retail
Free Standing Retail refers to single retail buildings that are detached from larger retail complexes or shopping centers. These properties operate independently and are not physically connected to other retail spaces.

4. Big Box
Big Box stores are large retail spaces characterized by their significant size and single-tenant occupancy. These stores typically offer a wide variety of products and goods, often in bulk or at discount prices.

5. Power Center
Power Centers are retail developments that feature a cluster of Big Box and anchor stores. These centers are designed to attract substantial foot traffic by housing several prominent retailers in close proximity..

6. Outlet / Discount Store
Outlet or Discount Stores are retail establishments that sell products at reduced prices compared to traditional retail stores. These stores often offer clearance items, overstocked merchandise, or products from previous seasons.

7. Neighborhood / Community Center
Neighborhood or Community Centers are compact retail hubs serving local communities. These centers include a mix of essential retailers and services, often focusing on convenience and meeting everyday needs.Tends to include strip malls, grocery stores, and pharmacies.

8. Factory outlets
Factory Outlets are retail stores run by manufacturers, offering their products directly to consumers. These outlets often sell merchandise at reduced prices, showcasing items from the manufacturer's brand.

9. Convenience centers
Convenience Centers are small-scale retail developments focused on providing easily accessible services and goods for nearby residents.

10. Mixed-Use retail
Mixed-Use Retail properties integrate retail spaces with other real estate uses such as residential, office, or entertainment components.

Office

1. Urban vs. Suburban
Urban and Suburban refer to two distinct types of locations within an urban area. Urban areas are densely populated regions with developed infrastructure, while suburban areas are less densely populated regions located on the outskirts of urban centers.

2. Class A
Class A properties are characterized by their high quality, modern design, and prime locations. In both urban and suburban contexts, Class A properties represent some of the most attractive and sought-after real estate assets.

3. Class B
Class B properties are considered to be of good quality but with some degree of age or less optimal locations compared to Class A properties. These properties offer a balance between quality and affordability.

4. Class C
Class C properties are generally older, more modestly appointed, and located in less desirable areas compared to Class A and B properties. They often offer more affordable options for both tenants and investors.

Healthcare

1. Medical Office (Ambulatory Care, Urgent Care, etc)
A Medical Office is a specialized commercial property designed to provide healthcare services.

Elderly Care

1. Skilled Nursing Facilities
Skilled Nursing Facilities, often referred to as nursing homes, are residential care settings that provide 24-hour medical care and assistance to individuals with complex medical needs. These facilities offer a higher level of medical attention and support than assisted living or independent living options.

2. Assisted Living Facilities
Assisted Living Facilities are residential communities designed to provide seniors with personalized care and assistance while promoting independence. These facilities offer a range of services, including help with activities of daily living (ADLs), meals, housekeeping, and social activities.

3. Independent Living Facilities
Independent Living Facilities, also known as retirement communities, cater to seniors who are relatively healthy and active but seek a community designed for their age group. These facilities offer amenities, social activities, services, and onsite healthcare.

4. Continuing Care Retirement Communities (CCRC)
CCRCs, offer a spectrum of care levels within one location. Seniors can transition from independent living to assisted living or skilled nursing care as their needs change over time.

5. Active Adult Communities
An Active Adult Community, often referred to as a 55+ community or retirement community, is a residential development designed to cater to individuals typically aged 55 and older. These communities provide amenities, services, and a lifestyle tailored to the preferences and needs of active seniors. It differs from Independent living in that it doesn’t offer onsite health services.

6. Adult Homes
Adult Homes, also known as adult care homes or adult foster homes, provide care and housing for seniors who may need assistance with daily living tasks but do not require intensive medical care.

Special Purpose

‍1. Self-Storage
Self-Storage facilities are commercial properties designed to provide individuals and businesses with space to rent and store their belongings. These facilities offer various-sized units for short- or long-term storage needs.

2. Farming
Farming properties are parcels of land used for agricultural purposes such as cultivating crops, raising livestock, and other agricultural activities.

3. Car Washes
Car Washes are commercial properties designed to clean and maintain vehicles, offering services such as automated car washing, hand washing, and detailing.

4. Cannabis
Cannabis properties are real estate assets used for cultivating, processing, or selling cannabis products in regions where cannabis is legalized for medical or recreational use.

5. Wineries
Wineries are properties dedicated to producing and selling wine, often encompassing vineyards, production facilities, tasting rooms, and sometimes event spaces.

6. Golf Courses
Golf Courses are recreational properties featuring well-maintained courses for playing golf, often accompanied by amenities such as clubhouses, pro shops, and restaurants.

7. Quarries
Quarries are sites where minerals, stone, or other materials are extracted from the earth for construction or industrial purposes.

8. Mines
Mines are properties dedicated to the extraction of valuable minerals, metals, or resources from the earth's surface or subterranean deposits.

Workforce / Affordable Housing

1. Mobile Home Parks
Mobile Home Parks are properties designed to accommodate mobile homes or manufactured homes. These communities provide residents with space to place their homes and often offer shared amenities and services. Mobile home parks feature individual lots or spaces for mobile homes, along with common areas, utilities, and sometimes recreational facilities.

2. LIHTC Development (Low-Income Housing Tax Credit Development):
LIHTC Development refers to real estate projects developed to provide affordable housing options for low-income individuals and families, utilizing the Low-Income Housing Tax Credit program. Developers receive tax credits in exchange for providing housing that meets specific affordability criteria set by the program.

1. Raw land
Raw Land, also known as vacant land or undeveloped land, refers to parcels of real estate that are in their natural state and have not been improved, developed, or built upon. Raw land has no structures or improvements and is often in its natural condition with no utilities or infrastructure.

Hospitality

1. Hotels
Hotels are commercial properties designed to provide temporary lodging accommodations to travelers and guests.

2. Motels
Motels, short for "motor hotels," are lodging establishments designed for travelers who seek convenient accommodations for short stays, often with parking directly outside the rooms.

3. RV Parks
RV Parks, also known as campgrounds or caravan parks, provide spaces for recreational vehicles (RVs) to park and stay overnight. These properties offer facilities and amenities tailored to RV travelers.

4. Campgrounds
Campgrounds are outdoor areas equipped with facilities and amenities for camping enthusiasts. They provide spaces for tents, RVs, and other camping setups.

5. Marinas
Marinas are facilities located along water bodies, such as lakes, rivers, or oceans, providing docking and mooring space for boats and yachts. Marinas often offer services and amenities for boaters. Marinas include docking slips, fuel stations, boat maintenance services, restaurants, and other facilities catering to boating enthusiasts.

Debt / Note Investing

Performing Notes
1. Reperforming notes
‍Reperforming Notes refer to loans or mortgages that were previously delinquent but have been brought back into current status by borrowers making payments on time. These notes experienced a period of delinquency but have resumed regular payment schedules.

2. Seller finance notes
Seller Finance Notes, also known as owner financing or seller carryback notes, involve a real estate transaction where the seller acts as the lender and provides financing to the buyer. The buyer makes payments directly to the seller.

Private Lending

1. Rehab loans
Pre-Rehab Loans are short-term financing arrangements provided to real estate investors for acquiring properties that require substantial rehabilitation or renovation before they can be resold or rented. These loans are often used to secure properties and initiate the rehabilitation process before transitioning to a longer-term financing option.

2. Construction Loans
A Construction Loan is a short-term financing arrangement used to fund the construction or development of real estate projects, such as residential, commercial, or industrial properties. It provides the necessary capital to cover construction costs, including labor, materials, and other expenses.

3. Bridge Loans
Bridge Loans, also known as interim financing or gap financing, are short-term loans used to bridge the gap between the immediate need for funds and a future permanent financing solution.

4. Mezzanine Loans
A Mezzanine Loan is a type of financing that sits between the senior debt (first mortgage) and the equity in a real estate project's capital stack. It is a subordinate loan secured by the borrower's ownership interest in the property-owning entity.

5. DSCR Loans
DSCR Loans are commercial real estate loans where the lender evaluates the borrower's ability to service the debt based on the property's net operating income (NOI) relative to the loan's debt payments.

Non-performing notes

Non-Performing Notes, often abbreviated as NPNs, are loans or mortgages that are in default or delinquent.

These notes represent debt instruments where borrowers have stopped making payments, and the loans are no longer generating the expected cash flow. Non-performing notes indicate a lack of borrower compliance with repayment terms, typically due to financial hardship or other reasons. Investors may purchase non-performing notes with the intention of either working out new payment arrangements with borrowers or pursuing foreclosure to acquire the underlying property.