Are you looking for a profitable investment opportunity, but you don’t want to spend a ton of time and money fixing up an affordable rental home?
Those fixer-uppers always seem like a great idea. The purchase price is low. The seller is often eager to negotiate. Before you know it, you’re the proud owner of an investment property. An investment property that needs thousands of dollars in work before it hits the rental market. Not only are you investing a lot of money out of pocket, you’re also delaying the rental income you’re hoping to earn on that property. It could be months before you’re ready to have tenants move in.
So, what are the alternatives?
We’re talking about them right here, our best alternative investment strategies for investors.
Quick Summary:
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Consider Build-To-Rent Communities
Build-to-rent is a fairly new investment strategy, especially for independent owners. It’s a great way to get a good deal on a new construction home, however, and one that’s strategically located in a neighborhood that specifically targets renters.
These communities are purpose-built residential developments that offer a unique blend of detached homes, professional property management, modern amenities, and a sense of community, which appeals to those who desire the benefits of homeownership without the burden of ownership.
Unlike traditional rental properties or apartment complexes, BTR communities are designed to provide an experience that mirrors ownership, often with uniform layouts and consistent floor plans. They also typically include shared community spaces and on-site pools and fitness centers. This makes them an attractive option for long-term renters who value convenience, quality, and a sense of stability but don’t want the responsibilities that come with owning a property.
For real estate investors, BTR communities present a scalable investment model. These properties often have predictable cash flows, high occupancy rates, and the potential for long-term appreciation, making them an appealing choice for those looking to build a stable, profitable portfolio.
While institutional investors and large companies are developing and managing many of these communities, there is space for the independent investor to buy a property (or a portfolio of properties) from them and then handle the leasing, management, and maintenance on their own or with the help of their own property management professional.
Well-Maintained Multi-Family Properties
A lot of real estate investors arrive on the market looking for a reasonably priced single-family home, and it doesn’t take them long to realize that in order to stay within their budget, a fixer-upper is their only option.
Consider multi-family properties instead. A duplex, for example, can provide two income streams and higher ROI. A small apartment building that’s already in good condition can bring in stable cash flow even while you make updates and renovations slowly.
Here are several reasons why investing in multi-family properties may be a smart move for your portfolio:
Stronger Income Performance
One of the biggest draws of multi-family real estate is the ability to generate more income from a single asset. With several units producing rent under one roof, total monthly revenue can far exceed that of a single-family rental. In a fast-growing market like Hampton Roads, well-located multi-family properties often stay in high demand, helping investors maintain steady and reliable income.
2. Operational Efficiency
Owning multiple units in one building can be far more efficient than managing scattered single-family rentals. Maintenance, repairs, and upgrades can be handled in one location, reducing time and labor costs. Additionally, investors often gain leverage when negotiating with contractors, property managers, and service vendors because the volume of work is larger and more consistent.
Built-In Vacancy Protection
Multi-family properties offer a natural buffer against vacancies. If one unit becomes empty, rental income from the remaining units continues to offset expenses. This diversification within a single property helps smooth out cash flow and reduces the financial impact that vacancies can have on overall performance.
4. Favorable Lending Perception
Financing can sometimes be more accessible for multi-family investments. Lenders often view these properties as lower risk due to their multiple income streams. In high-demand markets, a strong rental history can further improve loan terms and financing options.
While the advantages are compelling, it’s important to consider the challenges. Multi-family properties typically require a larger upfront investment than single-family homes. Purchasing a duplex, fourplex, or larger building in Hampton Roads often means higher acquisition costs, along with increased expenses for taxes, insurance, and ongoing maintenance. For investors with sufficient capital and a long-term strategy, however, the potential rewards can outweigh these initial hurdles.
REITs and Real Estate Syndications
REITs are a great way to gain exposure to the real estate market without the complexity of being a landlord. They provide regular dividend payouts from the income generated by the properties they own, and investors can buy and sell shares just like stocks.
For investors in Hampton Roads and the surrounding areas, REITs focused on commercial properties, multifamily housing, or even data centers can be an excellent way to diversify. Additionally, some REITs specialize in coastal or tourist-based properties, making them particularly relevant to the Virginia Beach market.
Here are some of the benefits to REITs:
Liquidity. Unlike traditional real estate investments, REITs can be bought and sold easily, allowing for more flexibility and less risk.
Diversification. By investing in a REIT, you're gaining exposure to multiple properties across various sectors, reducing the overall risk associated with investing in a single property.
Low Minimum Investment: Many REITs allow you to start investing with relatively small amounts of money, making it easier to enter the market.
For those looking to invest in larger commercial projects but without the capital required to buy a building outright, real estate syndications offer a compelling option. A real estate syndication is a partnership where multiple investors pool their resources to invest in a larger property, such as an apartment building or commercial complex. A syndicator, or sponsor, manages the day-to-day operations, while investors receive a share of the income generated by the property.
Syndications allow investors to participate in high-value projects that might otherwise be out of reach. Hampton Roads, with its growing population and diverse economy, presents opportunities for syndications in both residential and commercial sectors. Investors can pool resources to invest in multi-family complexes, office buildings, or retail properties, which can generate significant income through rent or property appreciation.
Here is why some of the investors we work with enjoy the Real Estate Syndication option:
Access to Larger Deals. With a smaller capital outlay, investors can get exposure to larger, more profitable properties.
Diversification. Syndications often invest in different asset classes and regions, helping you diversify your portfolio.
Expert Partners. Syndicators have often done this before and with large properties. This reduces the risk for passive investors who may not have the expertise to handle complex deals on their own.
Look for Value-Add Investments That Aren’t Total Fixer-Uppers
A rental property in need of cosmetic updates but no major renovations is a great investment strategy.
This will allow you to make the types of improvements that raise rental values without a delay in getting that home on the market. It strikes the ideal balance between opportunity and efficiency. Unlike total fixer-uppers, which can drain time, capital, and energy through major renovations, value-add investments typically need only strategic upgrades to unlock higher returns.
Look for rental properties that will benefit from improvements such as:
Modern kitchens
Updated flooring
Enhanced curb appeal
Smart home technology additions
Added amenities
These improvements and updates can significantly boost rental value without the risk of structural surprises or extended vacancies. By focusing on properties that are already functional but under-optimized, investors can shorten renovation timelines, control costs, and place tenants more quickly.
In our professional experience, this approach allows for faster cash flow, reduced holding expenses, and a stronger return on investment, making value-add properties a smarter, more predictable path to long-term portfolio growth.
While the allure of the fixer-upper may still be strong, real estate investors in Hampton Roads, Virginia Beach, and throughout the Chesapeake area have a variety of alternative strategies to explore. From rental properties in Build-to-Rent communities and REITs as well as multi-family investments and value-add opportunities, there are diverse options to consider. Start by reviewing your investment goals, and talk to us about what might come next.
By broadening your investment approach and understanding the unique dynamics of the local market, you can build a more resilient and profitable real estate portfolio.
As with any investment, it’s crucial to do your due diligence, work with local experts, and assess your risk tolerance before diving in. And we are here to help. Contact us at Doud Realty Services, Inc. We provide expert property management in Norfolk, Portsmouth, Hampton Roads, as well as surrounding areas such as Virginia Beach, Suffolk, Chesapeake, and Newport News.