Over the many years I’ve been involved in real estate investment, I’ve found that it takes many different kinds of personal qualities to be a successful speculator. One of the most important, I’ve discovered, is patience. The ability to be patient, and to be able to hold your nerve is an absolutely fundamental skill, I believe, for any potential investor, in any market.

The waiting game

Why? Well, for a number of reasons. Patience is required when market conditions aren’t suitable for a particular kind of investment. Sometimes, you need to wait until economic, political or demographic changes occur and alter the investing landscape to your advantage. And, at other times, you also need to be patient once an investment has been made. Hasty decisions, reacting to the micro, day-to-day changes of the market while failing to see the bigger, macro view of the overall direction in which it is heading, can lead to huge losses. Sometimes – but not always – it’s good to wait and see what happens.

Strategic aims matter

Which leads me on to a key question. What is more beneficial – short or long term real estate investments – and which can offer you a better potential return on investment? Well, we’ll look at their relative advantages and disadvantages in a moment, but first I’d just reinforce just how important it is for either approach – long or short – to be a part of an broader investment strategy.

This has to be the starting point for any investor, before they make any decisions about the length of the deals they’re going to make. So, take some time to assess why you’re making the investments in the first place. What are you trying to achieve? Are wanting to create a nest egg for your retirement, or are you looking to raise cash to start a new business? And most importantly, what degree of risk are you willing and financially able to take on?

Long or short?

They’re all perfectly valid motivations for investing in real estate – but they’re need to be thought about before you decide on whether you’re playing the long or short game, because these different approaches can bring very different results.

Let’s look at long term real estate investments first. These could include so-called buy-and-hold strategies, in which you buy a property with the aim of holding it for a long time. You’ll most likely rent it out to tenants in one form or another, receive a regular, monthly income, and then hopefully be able to sell it in the future for a profit. In the Mexican real estate market, a great example of this kind of strategy are the beachfront apartments you’ll find in places like Playa del Carmen in Tulum. Somewhere like this feels a relatively safe bet, with a huge amount of demand from visitors from the US and Canada providing a steady income stream.

Another alternative form of long term investment comes via real estate investment trusts. In Mexico, these are know as FIBRAs and they represent a great way for investors to build up a diverse portfolio of properties to invest in. Typically, these properties could include residential homes to offices, hotels, restaurants or shopping centres – the point is that the real estate investment trust structure gives you the chance to try and get a healthy return on your investment right across a broad range of real estate sectors, rather than just focusing on one. It’s also a good option for a investors who don’t want a particularly hands-on role in their property investment – but who still want to enjoy a good return over the longer term.

Playing the short game

Short term investment strategies offer a different kind of opportunity, and are better suited to those investors who need to raise funds quickly and access that cash to use for other business interests. One such strategy is the so-called fix-and-flip – where the investor buys a property that is undervalued for some reason (for example its poor condition), invests money to improve it and then sells it on for a much higher price. Clearly, if you’re thinking of investing in this way you’ll need to be good not just at spotting an opportunity, but also at managing your resources so that you can afford to invest to improve the property itself. It’s a delicate balancing act, but one that can really pay off.

Real estate wholesaling is another short term investment option for many. Simply put, this sees the investor acting for sellers as a contracted agent, finding a buyer and then selling the buyer the contract. The advantages for many investors are that it is a great way into real estate investment for investors who don’t have a lot of capital available. You’re not the owner of the property for sale and a lot of the financial liability in the form of taxes that goes with most real estate investment.

So which do I favour? In both cases, long and short term real estate investments, you’re trying to build your investment and get a regular income – that much is clear. But it’s also clear that both long and short term investment strategies can serve very different purposes. Buying into real estate with a short term approach can be a great way to make a quick profit and generate funds for another business venture.

But on the other hand longer term investments can give you far higher returns, on a regular basis, with a useful lump sum at the end if you manage to see for a profit.

Whether you go long or short depends on how quickly you need to see the returns – and, ultimately, how patient you’re prepared to be to wait for them to grow.