Investing in real estate is one of the most common investments for people looking to create a passive income. But, what is it and why is it so popular? Real estate investment is anything involving the purchasing, renting, or selling properties to make a profit. And it’s popular because it is considered almost risk free, since property worth is always rising, so the value is appreciating.
But is any and all property investing worth it for you? It can be, but there are many factors to consider and analyze in order to understand which property investment is right for you.
If you are planning to make a long term investment, you might want to consider purchasing a property, and waiting for the value of the property to appreciate in order to resell. However, one important thing to consider is that you will be needing to cover the mortgage payment until you resell the home. One way of doing this would be to make it a rental.
Another option for gaining a resell profit would be to purchase a fixer-upper for a great deal, and do a remodel. Something to keep in mind, though, is that in order to ensure your profit, you’ll need to get a very accurate assessment of all the work the home will need, or the resell value might not cover your expenses.
If the purpose of your investment to generate steady monthly income, then a investing in a rental property would be your best bet. Assuming the property doesn’t need a lot of work or a full remodel, you can start renting out the unit, or units, almost instantly. However, remember that you will now be a land lord, meaning that you’ll be responsible for any handy work needed. More importantly, there are a lot of rent control laws taking effect and limiting your rights as a land lord, and owner.
If you have commitment issues, then one option would be to rent out your investment property, or even an unused room in your home, on a short-term, like AirBnB.
Weather you choose to do a flip, or rental, the basic rules of any good real estate purchase still apply. This is where we come in to help! First, at the chance of sounding cliche, location location location. Location is a big, if not the biggest, factor that determines price. Also, it’s important to keep in mind areas that are growing in popularity, like (NELA 10 years ago!), as the value of those property is likely to also grow (fast).
Second, you’ll need to know when it’s a good time to buy or sell your investment, in order to compare your investment against the current property market value. It just needs to make sense, and it can be quite overwhelming to try to figure that all out on your own.
Finally, analyze whether the property is right for your needs. Is the fixer-upper too beat up for your flip? Is the long stair case going to turn away potential renters with little kids? Your agent can help keep you in line with those details.
If you are ready to take on real estate investing, we can help! Whether HGTV has you pumped about doing a flip, or you see the great value in steady income from a rental, we can walk you through every step of the way!
