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There are many types of real estate, and different ways to invest in them. Which way is best is your decision, according to your particular needs. Here are a ten ways to consider, each with their advantages and disadvantages.
1. Rental homes. Advantages: An easier way to get started, and a good long term return on investment. Disadvantages: Landlording isn't much fun, and you typically wait a long time for the big pay-off.
2. Rent-to-own deals. Advantages: When you buy, then sell on a rent-to-own contract, you get higher rent, and the buyer is usually responsible for maintenance. Disadvantages: Bookkeeping can tricky, and many tenants don't complete the purchase (this can be an advantage actually, but it does mean more work for you).
3. Low income rental properties. Advantages: The same as with other rentals, but with higher cash flow. Disadvantages: The same as with other rental properties, but with more repairs and tenant problems.
4. Fix-and-sell. Advantages: Quick return on your investment, and creative work. Disadvantages: High risk, due to many unpredictables, and you get taxed heavily on the gain.
5. Buy cash, sell terms. Advantages: A high rate of return by paying cash to get a good price, and selling on easy terms to get a high price and high interest. Disadvantages: Ties up your capital for a long time.
6. Buy, split, and sell land. Advantages: Simpler than most real estate investments, with the possibility of great profits. Disadvantages: Can take a long time, and you have expenses, but no cash flow while you wait.
7. Boarding houses. Advantages: More cash flow renting a house by the room, especially in a college town. Disadvantages: More headaches renting a house by the room, especially in a college town.
8. Commercial real estate. Advantages: Triple-net leases mean little management and high returns.
9. Live in it and fix it up. Advantages: New tax law means you can fix it up, and sell for a big tax-free profit after two years, then start the process again. Disadvantages: You may have to move a lot.
10. Real estate speculation. Advantages: Buy in the path of growth and hold until values rise, and you can make large profits, especially if you buy low to start. Disadvantages: Prices aren't always predictable, you have expenses with no income while waiting, and transaction costs can eat much of the profits.