There are so many different types of real estate investments, I would be hard-pressed to list them all here. I suggest we schedule some time to work together to find the best fit for you, but in the meantime, here is an overview of some of the more-common real estate investments:
Rental Properties- Long-Term Hold, Monthly Cash Flow
It is very common to own a home, townhome, duplexes, condo or multi-family properties as a landlord and rent it out – either yourself or via a property management company. In our area, rental properties are usually leased for one year or longer.
There are two big benefits to owning rental properties in terms of the investment side:
- Monthly cash flow (with increasing rents, usually in excess of increasing expenses) PLUS
- Long-term appreciation
There are also some things to keep in mind:
- Evicting tenants who don’t pay
- Collecting for damage done to the property
- Property upkeep and repairs need to be budgeted
Owning rental properties can indeed be very lucrative!
Vacation rentals
Owning a vacation rental, especially in a spot that you like to enjoy at least once a year, can be profitable…and enjoyable! These days with VRBO and AirBNB, getting the word out about vacancies in your vacation rental can be easier than ever.
Vacation rentals can include single family homes, townhouses, condominiums, duplexes and other multi-family units. There are indeed laws that you will need to be sure an comply with if you are buying a property with an intent to rent it short-term.
The benefits to owning a vacation property include:
- Cash flow (possibly seasonal)
- Long term appreciation
- Able to use the property yourself on a limited basis each year
There are also some things to keep in mind:
- If the property is not in your area, it may be tough to keep tabs on it. Luckily there are new smart home technologies that can help!
- Renters can be rougher on the property than a long-term renter.
- Possibly inconsistent income – seasonally and based on the economy.
Flips
If you have seen HGTV, you are probably familiar with flipping properties. A flip usually involves an investor who purchases an undervalued property either through an auction or directly from a seller if the home is in too rough shape to sell via traditional means. The investor then hires a contractor to fix the home up. Usually these houses are sold again for a profit in very short order. However, they can also be held as rentals.
Flips can be a great way to generate short term gains if the home is resold as soon as the work is complete. They can also bring in good monthly cash flow if then rented.
The benefits to a flip include:
- Short term gains (if sold when work is done)
- Long term appreciation plus monthly cash flow if the home is rented
There are also some things to keep in mind:
- Although you should budget for unexpected things that come up, sometimes these things cost more than you have budgeted, shrinking your gains.
- The costs to buy and then sell a property can shrink your gains.
- If the market shifts while the home is under construction, you may need to rethink your strategy.
