Investing in real estate can be truly financially rewarding when you know what you are doing. When you buy investment property, you should already have in mind what many real estate investors call the exit strategy that you are going to implement for that particular property. This means that when you get involved in a deal, it must be clear in your mind how you are going to make money out of it. When you buy investment property, you can consider five ways of earning.
Buy Investment Property for Appreciation
Some people who are unacquainted with the real estate business think that the only way to make money when you buy investment property is by buying and holding the property until its value appreciates. You make money through capital gains. Although the value of real estate has always been shown to eventually rise, however, this is rather speculative and there is no exact science that can calculate when and how much the rise would be. Hence, if you rely on appreciation alone to make money, you are not in the locus of control. Also, certain cycles in the real estate market, such as now, may devalue the worth of your property. Only those who have a glut of funds can afford to park their money in this guesswork for an uncertain period.
Buy Investment Property for Rental Income
To address the uncertainty issue of the buy and hold strategy, you can just put appreciation at the back of your mind in the meantime. While waiting for appreciation to take place, you can be at the helm of your earnings by renting out your property and establish cash flow through rental income. You must keep in mind, however, that being a landlord is altogether a whole new ballgame where you have to deal with tenants and toilets. If you do not have the time or patience to manage the property, you can always hire a property manager to delegate the work for you.
Buy Investment Property for Cash Flow Sans the Hassles of Property Management
To help you sleep better at night and not worry over what damage your tenants could possibly do to your property, you may offer Lease Options. With this agreement, the tenant has the option to purchase your property. With the possibility of owning the place, your tenant will surely take care of it. The waves of earnings in Lease Options usually start with a considerable downpayment from the tenant-buyer.
Buy Investment Property for Quick Cash
A popular strategy for many real estate investors today, especially those who do not yet have sizable capitalization, is they buy investment property below market value and sell them usually also slightly below market value for quick cash. Buying investment property below market value ensures you of a wider profit margin. Selling slightly below market value helps you sell the property much faster so that you can get on with the next deal.
Buy Investment Property and Rehab for a More Handsome Profit
Many seasoned real estate investors also buy investment property that needs fixing at a bargain, rehab it and sell or rent it out for profit or cash flow. Buy-Rehab-Sell (or Rent Out) strategy requires a deeper pocket to fund the renovations. It also requires particular savvy in dealing with contractors and the rehab project itself. These demanding requisites are well compensated for by handsome profits. Rehabbing increases the market value of the property that is why with this strategy, you can also earn more than just simply flipping.
When you buy investment property, you can adopt any of the five strategies of making money according to your preference and style; you may even do a combination of them, or perhaps think of a new one.
- How to Avoid a Common Mistake All Newbie Real Estate Investors Make (buyfixandprofit.com)
- Where to Source Your Rehab Funding (buyfixandprofit.com)
- Lease to own Charlotte, NC. A major hole in lease option (theleasetoowncharlotte.com)