Why Buying Properties Might Not Be the Best Real Estate Strategy

By - Friday, June 07, 2024

Thinking about investing in real estate? Here are some reasons you might want to reconsider purchasing properties:

The Cost of Buying

If you're planning to purchase a house, you’re looking at spending around $50,000 to $100,000 just for the down payment. That’s a significant chunk of money tied up in one property.

A Smarter Alternative: Mid-Term Rental Arbitrage

Instead of buying properties, you can use that same amount of money to rent about seven properties and sublease them to companies for mid-term stays. This strategy enables you to diversify your risk by investing in multiple properties instead of concentrating all your resources in one location.

The Advantages of Mid-Term Rentals

Low Capital Investment: Compared to buying, renting properties requires much less capital upfront.

Minimal Employee Overhead: You don’t need to hire a large staff to manage your properties.

Flexible Work Hours: This business model only requires you to work about 5-10 hours a week.

No Need to Purchase Properties: You can leverage someone else’s property and still earn a substantial income.

How It Works

Here’s a breakdown of how corporate housing mid-term rentals can generate significant cash flow:

Rent: $2,500

Deposit: $2,500

Utilities: $500

Other Expenses: $500

Bought furniture: $7,000

Sublease it for: $5,500

Profit Calculation

Total Monthly Income: $5,500

Total Monthly Expenses: $2,500 (rent) + $500 (utilities) + $500 (other expenses) = $3,500

Profit: $5,500 - $3,500 = $2,000/month cash flow

​With just one property, you can generate a profit of $2,000 per month. Imagine the potential with multiple properties!
​One interesting substitute for conventional real estate investment is mid-term rental arbitrage. Renting and subleasing real estate to corporate clients will help you to maximize earnings with lesser investment and less work hours. This approach not only spreads your risk over several sites but also makes excellent cash flow possible by using the advantages of someone else's property. Take advantage of the chance to discover more about this profitable business concept.




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