There are many methods for acquiring wealth in the world today. One of the most easily accessible ways, even for the new investor, is real estate investing. Real estate is a profitable vehicle for any investor who is dedicated to learning about all of the different types of investments, option, risks and potential rewards that come with real estate investing. There are many different ways to invest in real estate. Some of the more common ones people use to get started are:
Rental Property investments can make money even if you pay top dollar for the property. Since you are going to hold onto this property long term, your only requirement is that the property generates a positive cash flow. After all of your expenses on the property like financing costs, taxes, insurance and a vacancy rate are paid, the amount you are collecting in rent should surpass this figure.You are making a small amount of money each month from the property in rental income, and you are also slowly building up equity in the property over time as you pay off the financing.
Pre-construction investments are mostly made on new condominium projects where investors buy the units before they are built assuming the price will come up once construction is complete. The major problem with this type of investing is it normally only works when a market is going up regularly. In a down market like we are experiencing right now, it’s much harder to make money although there are still some good deals out there, the tricky part is identifying which places are going to be seen as desirable to live in and experience market growth in the next 12-24 months.
House flipping or condo flipping has increased in the last few years thanks to the popularity of many home improvement and house flipping shows. You have to be aware of all of the hidden costs like marketing the property, closing costs, plus carrying costs if the home doesn’t sell right away, etc. You need to make sure you are buying the property at a significant discount to cover yourself completely.
Buy and hold
Real estate almost always gains value over time. Even the less sought after properties in average neighborhoods will probably accrue equity if given enough time. History has shown us that even when a large market correction occurs, properties do eventually recover and increase in value. The secret is to make sure the property is at least covering it’s own costs while you wait for the equity to build up in it.
Not everyone has perfect credit. For those who have credit issues, finding a lender to purchase a home can be an impossible task. These people need time to get their credit repaired. They are perfect candidates for lease options. The whole idea behind this is that you’re paying for the privilege of rebuilding your credit score faster, while working towards the ultimate goal of home ownership.
Investing in real estate can be very profitable venture if you have the proper information and methods. Investing in rental properties or properties still under construction, condo/home flipping, holding property after purchasing it, and providing leasing options are great ways to stay ahead of your competition.