If you’ve ever thought about investing in real estate, you probably already know that it can be a pretty lucrative venture. With the right market and a little know-how, real estate investment can give your income a great boost—or even become your primary source of income!
But what exactly does it mean to invest in real estate? What are your options when it comes to buying and selling your properties? We have outlined the three most popular options below (at least when it comes to private residences), to help you know where to get started.
Ever heard the term “flipping” when it comes to real estate investment? It’s a pretty popular option for property investors, especially in recent years. What flipping entails, at it’s most basic level, is buying a house at a low price (perhaps because it’s in poor condition), fixing it up, and then selling it at a higher price for a profit. Think of those popular HGTV shows: they’re basically house flippers.
This method of real estate investment has pros and cons. If you do it right, you can make a good amount of money on a flip. Flipping could also be a way to take advantage of a poor market. However, flipping can also go wrong. You need to watch your numbers (and your cash) carefully since repairs to a property can add up fast. It will also require quite a bit of time and attention since you’ll want to keep a close eye on the contractors you hire to complete the repairs and improvements.
Buy and rent
Another real estate investment option is buying a property that you then rent out to others. Essentially, you become a landlord.
There are a few positive sides to this. One big one is that you are collecting rent (it should be enough to cover your mortgage and expenses) while also letting the home’s value appreciate. Basically, you’re making money in two places at once. Also, there are almost always people looking to rent homes, so as long as you have an attractive property in a good location, you shouldn’t have too much trouble finding renters.
That said, there are some downsides to this option, too. As with any real estate investment, it’s very important to stay on top of your financials. Repairs and maintenance can add up fast, and any time your property spends unoccupied ends up costing you money. This can make owning a rental property a stressful endeavor, so make sure you’re willing to put in the time and work before pursuing this route.
Sell your primary residence
This may seem like straightforward home ownership, but if you do it right, it can actually be an investment method. This involves purchasing a property, using that property as your primary residence, and then selling it later, hopefully making a profit on the appreciation of the property.
This is probably the least risky way to invest in property; using the property as your primary residences allow you to avoid certain costs, and living in the property yourself means that you can care for the property without worrying about how another tenant will treat it. However, depending on the market and your specific strategy, it may be less profitable than other ventures, since you won’t be collecting rent. It could also be tricky for you to sell the property for much more than you paid for it unless you upgrade the property while you live in it.
Jeff Barchi has been a REALTOR® and one of the best real estate agent Arizona expert and managing homes for sale in the Greater Phoenix area since 1999. He is ranked in the top 1% of all real estate agents in Arizona in Greater Phoenix, two-time winner of top 40 Realtor AZ under 40 awards, and the top 2% of all agents nationwide. In 18 years Jeff, as a leading Arizona real estate agent, has participated in approximately 900 transactions, i.e. homes for sale in Arizona, averaging approximately 50 per year. To put this number in perspective, the average Realtor AZ closes 11 transactions per year. If you are looking for the best real estate agent Arizona expert, Jeff Barchi is your guy. His real estate firm has been praised as the best Phoenix real estate agent, he has been a very successful Scottsdale real estate agent and Paradise Valley Realtor.