If you’re looking to get involved with real estate investing, there are plenty of ways to get into the market and start making money! Depending on your preferences and prior investing experience, some options may be more ideal for you than others. Each type of real estate investment has different funding, maintenance, and management requirements, but they all have their respective benefits and the potential to provide an impressive income. If you’re in the research stage and you want to know more about your options, keep reading for a breakdown of a few of the most common (and profitable) property investments!
If you have an eye for design and you’re up for putting in some work, flipping houses could be the right investment option for you. If you aren’t ready to commit to a long-term property purchase, you can buy a fixer-upper in a promising neighborhood, make some strategic renovations, and resell it at a higher price.
While this option could be really fun for an investor who enjoys home improvement projects, it can be a risky option. If the property you purchased needs more upgrades than you expected, you could end up dumping more money into the home than you’ll earn at resale. On top of that, houses can sometimes take months to sell–leaving you with extra expenses and no immediate profit.
That said, flipping houses can be a rewarding investment choice if you make smart choices. If you are selective when choosing your property, make cost-effective upgrades, and market your property well, you could turn a great profit while enjoying the process.
Another popular option for investors is to purchase rental properties. There are plenty of different kinds, but the most common are single-family rental homes. Investors can purchase a home or unit and, instead of preparing it for resale, they can rent it out to a tenant on a long-term basis.
A potential downside of this investment option is that the investor often serves as a landlord to their tenant, which makes them responsible for resolving any requests or issues that they may have. The landlord-tenant relationship can sometimes cause stress, but if the property is maintained and the rental agreement’s terms are followed, it can be mutually beneficial.
All rental properties can provide consistent passive income for the investor, making them some of the most profitable investment options. If you’re up for the task of management, rentals will pay off in the long run/
Like single-family rentals, multi-family rentals offer a reliable stream of income for investors willing to maintain and manage them. The biggest difference between the two is that the increased number of tenants makes multi-family rentals more expensive to purchase and keep up.
If purchasing an expensive multi-family property is deterring you, there are plenty of ways to finance your initial purchase and start earning a profit. You can even apply for a commercial loan program that will help you get started and keep your rental operation separate from your finances. Experienced investors may even choose to go in on a big purchase with partners who can help share the burden of funding and maintaining the property.
If you can get involved with a large multi-family rental like an apartment complex, you could make some serious money and get an excellent return on your investment. Unlike single-family rentals, vacancies and individual tenants pose less of a threat to your business because the other tenants’ payments will balance them out and ensure a positive cash flow.
If any of these options appeal to you, you can find a property that suits your needs and get started on your next big real estate project! Whether you choose to polish up an old home or start renting out a few units, you can find an investment option that works for you!
Featured Photo by Tierra Mallorca on Unsplash