Below are ten groups of real estate, and different methods to invest in them. The greatest one for you is something only you can decide, according to your particular requirements. To assist you do that, I listed a couple of good points and bad factors for each type.
1. Renting single family homes. Great factors: An simpler way to get started, and great long term return on investment. Poor factors: Being a landlord isn’t much fun, and you usually wait a lengthy time for the big pay-off. You also shed all your income when a home is vacant.
2. Fixer-uppers. Good factors: Fast return on your investment, and it can be much more creative function. Poor points: More risk (many unpredictables), and you get taxed heavily on the gain.
3. Low income housing. Good points: Similar to any other rentals, but with greater cash flow. Bad points: Comparable to any other rentals, but with much more repairs and tenant difficulties.
4. Selling rent-to-own houses. Good factors: Should you purchase, then sell on a rent-to-own arrangement, you get greater rent, and also the buyer is generally responsible for maintenance. Bad points: Bookkeeping can be tricky, and most tenants do not complete the purchase (this can be an advantage too, but it does mean much more work for you)
5. Commercial properties. Good factors: Multi-year triple-net leases mean little management and higher returns. Poor points: A tough market to break into, and you are able to lose income on vacant storefronts for any year at a time.
6. Land, split and resold. Good factors: Simpler than some real estate investments, with the possibility of excellent earnings. Bad factors: It could be a slow procedure, and also you have expenses, but no cash flow while you wait.
7. Boarding houses. Good points: You will generate much more money flow renting a home by the room, particularly in a college town. Bad points: You will generate much more headaches renting a house by the room, particularly in a college town.
8. Invest money, sell with terms. Great points: A high rate of return is possible by paying cash to obtain a good price, and promoting on simple terms to get a high price AND higher interest. Poor factors: You need a lot of cash, and you tie up your capital for a long time.
9. Invest, live in it, sell it. Great factors: The tax law lets you fix it up, and market it for a big tax-free profit after two years (should you live in it), then start the procedure again. Bad factors: You might turn out to be attached to your investment, and you will need to move a lot.
10. Pure speculation. Great factors: You are able to make big earnings purchasing within the path of growth and holding until values rise, and it is really a low-management investment. Bad points: Growth in value isn’t usually predictable, you have expenses with no income while you’re waiting, and transaction costs can eat much of the profits.
There are lots of ways to invest in real estate. These ten are just to get you thinking about what is feasible, and what kind of investing suits your personality. Once you figure that out, you may wish to look into other groups of actual estate investment.
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