Real estate investing is becoming more popular these days – not only because it is lucrative, but this is because a lot of people have seen huge success with it. One of the most important aspects when investing in real estate is ensuring you have a solid plan and outline of goals, which includes your budget and property location choices. If this is something that caught your interest, here are 4 ideas on how you can get started, and some strategies that can help you determine which kinds of real estate properties are right for you.
- House Flipping
This is one of the most common, and probably the easiest way to get started in this industry. Although considered a short-term real estate investing method, this strategy can give you a 20% – 40% ROI. What you need to look for are distressed properties, have them repaired and sell them at a higher cost.
There are some risks such as going over budget during the repair, so this is something that you may want to take a look at. If you have a real estate construction background or is knowledgeable in this area, this is right for you. This way, you’ll be able to easily estimate the costs it would take to repair the home, and make a good judgment whether a property is worth flipping or not.
- Vacation Rental Properties
This next strategy doesn’t include any selling, but you’ll purchase a vacation property and have it available for rent all throughout the year. This is perfect for those individuals who are looking for a passive source of income but still have a property of their own. With it, the rentals can offset the total cost of the property itself, and get ROI up to 90% – especially if you have a very good location.
While it is profitable, just like any other strategies, there are risks involved. You have to make sure that you maintain the property, make sure it is in its top condition. You may also have to pay for additional expenses such as insurance and mortgage.
This strategy is perfect for investors who want to have the option of owning a property and have the option to use it for their personal vacation.
- Buy And Hold
If you’re looking for a long-term real estate investing strategy, this one is right for you. You can have the property available for rent, for more or less 5 years. The ROI is pretty good – which ranges from 9 – 50% depending on your location.
One thing you should watch out for is buying properties that are situated in accessible locations. Possible risks may include tenants not being able to maintain the property and may not be able to pay the rent on the time.
This is for investors who are looking for long-term investment, and those that are looking for a tangible asset that doesn’t depreciate but appreciate after some time.
- Commercial Properties
The last in our list are commercial properties. While commercial properties are more expensive than residential real estate, these offer better returns in ROI – around 15% over a year. The only downside of this strategy is when the property has been left vacant for a long time, making it difficult to offset the mortgage costs.
This strategy is great for experienced real estate investors as this requires more startup costs and insurance rates. However, once maintained properly, and if in a suitable location, this would work great and the property can pay for itself within a couple of years.
No matter which strategy you’d choose, it is always best that you work with a real estate mentor, or be a part of a real estate investing group. This is where you can get some guidance and ensure that you’ll make the right choices whenever buying your next real estate.