Which Types Of Real Estate To Invest In
There are different types of real estate, and different ways to
invest in them. Which way is best is for you to decide,
according to your particular needs. Here are a few ways to
consider, with their advantages and disadvantages.
1. Rental houses. Advantages: One of the easier ways to get
started, and good long term return on investment. Disadvantages:
Being a landlord isn't much fun, and you typically wait a long
time for the big pay-off.
2. Rent-to-own houses. Advantages: When you buy, then sell on a
rent-to-own arrangement, you get higher rent, and the buyer is
usually responsible for maintenance. Disadvantages: The
bookkeeping is tricky, and most tenants don't complete the
purchase (this can be an advantage too, but it does mean more
work for you).
3. Low income rentals. Advantages: The same as with any
rentals, but with higher cash flow. Disadvantages: The same as
with other rentals, but with more repairs and tenant problems.
4. Fixer-uppers. Advantages: A quick return on your investment,
and it can be more creative work. Disadvantages: Higher risk
(many unpredictables) and you get taxed heavily on the gain.
5. Buy for cash, sell for terms. Advantages: You get 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: You tie up your capital for a long time.
6. Buy land, split it and sell it. Advantages: It is simpler
than most real estate investments, with the possibility of great
profits. Disadvantages: It can take a long time, and you have
expenses, but no cash flow while you wait.
7. Boarding houses. Advantages: You can get a lot more cash
flow renting a house by the room, especially in a college town.
Disadvantages: You can get a lot more headaches renting a house
by the room, especially in a college town.
8. Commercial real estate. Advantages: Long term triple-net
leases mean little management and high returns. Disadvantages:
Tough market to break into, and you can lose income on vacant
storefronts for a year at a time.
9. Buy, live in it, and sell. Advantages: The 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 have to
move a lot.
10. Speculation. Advantages: Buying in the path of growth and
holding until values rise can yield large profits, especially if
you buy low to start. Disadvantages: Prices aren't that
predictable, you have expenses with no income while you're
waiting, and transaction costs can eat much of the profits.