Real estate can often be a difficult industry to get started with due to the number of different ideas and niches that can be applied to your business. It’s also a business that is highly dependent on your location, making it a very dynamic business that is quite difficult to get a grasp on without plenty of hands-on experience.
Thankfully, there are a couple of real estate investments and niches that are going to stick around for a very long time thanks to the way they interact with society. To help you get started or to even empower your real estate business, we’ve prepared a handful of excellent real estate investment ideas that will uplift your business.
Let’s start with perhaps the most profitable and worthwhile real estate investment today; rental properties. More and more people are focusing on rentals because buying a home is simply too expensive and millennial’s usually aren’t content with just staying put in a single place anymore. They’re more interested in moving around and relocating wherever their job or career takes them, making rentals a very suitable investment for all real estate businesses regardless of their size.
Rentals can range from affordable housing to luxury properties. It’s a very broad scope and it’s one of the safest real estate investments you can make because you’re going to see almost guaranteed returns on your properties. It may take several years to see profits from those investments but sooner or later, it will be profitable and you’ll receive a very steady flow of cash from your rental properties.
As a landlord, you’re going to have quite a few responsibilities such as ensuring that the property is in good condition and you’ll also need to repair anything that has broken or needs fixing. There are some rules to this, such as being able to charge your tenants for damage that they have done themselves to the property, but in general, you’ll be responsible for most of the repairs in the property.
One unique component to this is the ability to rent out properties that you don’t fully own yet. If you’ve still got a mortgage to pay off, then it’s possible to charge just enough rent so that you’re able to cover the costs of the mortgage and maintaining the property, but also charge a little extra to make a profit. This means that many people can actually get started with a real estate investment as long as they’re eligible for a mortgage and are willing to make the calculations necessary to ensure that the rent they receive is enough to pay off the mortgage.
Over time, your property is likely going to increase in value as well, meaning that you’ll be left with a more valuable property that can charge higher rental fees in the future, or even be sold for more than you bought it for. There are plenty of fantastic advantages with rental properties and they’re one of the most solid investments to make in today’s real estate industry. If you’re going to make any real estate investments in the future, then investing in a rental property is a great idea that will help you get started in the industry or even help you make some money alongside your regular job.
Real Estate Investment Groups
If you’re not sure you want to bother with the hassle of managing your properties and becoming your own landlord, then you may want to consider becoming part of a real estate investment group. It’s considered a little safer in the event that you’re not sure you can manage a rental property alongside your job and there’s often less money involved meaning you might be more comfortable making the investment.
The way this works is rather simple. A company will typically buy a set of apartments or buildings that they will rent out. They’ll open up to investors that can then buy them through the company. A single investor can own one property or multiple if they want to, but the company will manage all of the investments and take care of everything from advertising to maintenance. In exchange for managing those properties, the investment company will take a portion of the monthly rent and pass the rest on to you.
You’ll typically receive monthly reports that will give you updates on how the property is doing, how much money it’s generating and also any concerns that need to be addressed. Outside of this, there’s very little that you need to manage and you can always consider selling your investment in the future if you want to pull out of the deal. In most cases, this is going to be a rather safe investment but it may take several years before you’re able to see a profit on your investment. However, in most cases, people aren’t concerned about how much profit they make and are more interested in the cash flow that it offers instead.
If you’re not sure about managing your own rental property or even hiring a company to do it for you, then you may want to consider looking at real estate investment group opportunities and purchasing one of the properties available instead.
Foreclosure investments can be a very lucrative way to kickstart your real estate investments. This is essentially purchasing properties that are undergoing foreclosure, where the homeowner has been evicted and the home is sold off for a different price because the owner was unable to make payments on their mortgage as explained in their contract. While it can sound like purchasing bargain properties at an auction, it’s much more involved and requires a considerable amount of work and focus in order to profit off it.
Much like purchasing antiques at an auction, you need to consider everything that goes into the item before you decide to purchase it. For instance, those who are interested in antiques will know the era that an antique comes from, how it affects the price and how much should be deducted for defects and damage to the antique. Similarly, you should have a great understanding of how defects can affect the price of a property, you should understand how much risk is involved when purchasing a property at auction and you should also consider the carry-on costs such as taxes, insurance and maintenance.
In other words, you need to be able to examine the property and understand what makes it stand out from the rest of the properties available on the market. You need to consider if the area of the property will become profitable in the future, and you need to visit the property or look deeper at it to see if there is any structural damage that needs to be repaired or decorating overhauls that should be performed before it can be marketed to the public again.
Real estate investors need to have some kind of goal or strategy in mind before they acquire a property, and foreclosure investments are no exception. What might initially seem like a good investment could turn into a waste of money due to changes in trends that you haven’t taken into consideration. You should also look into the local market and consider factors like population and job growth and niches that the property you’re buying might meet, ultimately improving its value and giving you a better investment.
Foreclosure investments are definitely a challenging form of real estate investment, but they can be incredibly lucrative especially if you can sniff out a good deal and trust your instincts. Of course, this does mean that you need both a lot of experience and knowledge in the real estate market, meaning you could buy yourself into a failing investment if you’re not careful. As long as you’re slow and methodical with how you analyze the property and have an exit strategy should it fail, foreclosure investments can be a fantastic choice.
Also known as house flipping, this is often considered a very lucrative but also unstable form of real estate investment that requires a lot of active participation in order to make a profit. However, there’s endless potential and your profit ceiling isn’t limited like with rental properties because you’re actually buying and selling properties at different prices.
Property flippers are often known as real estate traders. They typically purchase property with the intention of only keeping them for a very short amount of time. They might perform some very simple cost-effective renovations and improvements to bump up the value, but their intention is to sell it again once the value has risen or if they can purchase a property at an undervalued price in a very competitive market.
Depending on your approach, property flipping can actually be more lucrative than other forms of property investment but you need to keep in mind that it requires you to take an active role by getting involved with the entire process. Houses and apartments are regular targets for house flipping but you can also consider commercial properties. You also need to keep in mind that there could be tax issues that typically aren’t faced by long-term property investors, and there are also many expenses that could be attached to any sale that you make.
The quick turnaround of properties can create huge income swings that might raise the amount of taxes you pay, and there’s always the possibility that an investment you make doesn’t turn out to be lucrative. Finding opportunities can also be difficult especially if you’re already a part of a saturated market. There’s a good chance that there are other property investors that want to flip houses in your local area, so there will most likely be fierce competition if you take up the mantle of a property flipper.
However, if you want to build up hands-on experience and would enjoy a buy-and-sell oriented approach to property investment, then flipping houses can be a fantastic way to get started with real estate investments as long as you’re willing to actively participate in the process and can quickly learn the ropes of how you can increase the value of a property.
Hopefully, these four real estate investment ideas have given you some direction on where you can take your business in the future. Between property flipping, foreclosures, rentals and investment groups, you have many choices that cover the entire spectrum of the real estate investments. Whether you prefer long-term strategies or quick turnovers, there’s an investment opportunity for everyone.
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