So you are looking to invest in real estate and you are thinking, what type of real estate should I purchase. This blog was written to specifically define a few of the advantages and disadvantages of different types of real estate purchases.
Advantages: Purchasing a rental house can be the easiest way to get started in real estate investment. A rental house can be a good long term investment, and if you can do the work of a remodel yourself, you can appreciate the value of your property quickly.
Disadvantages: Being landlord can be very difficult. Finding ideal tenants, collecting rent checks on time and having to deal with repair issues can be difficult on a owner. It is always recommended to consult a professional property manager (which can cost money) to see what the market value of your home is. A good property manager can remove a lot of stress and time from your investment.
Advantages: As with any rental, this can yield a great long term investment, but has a higher cash flow.
Disadvantages: If you can make your property approved with section 8, you can receive consistent paychecks from the government. A major downside to this investment will be tenant problems/vacancy periods and high maintenance costs
Advantages: You can purchase a fixer-upper well below market value, and can return a very high yield on your investment. It can also be more creative work, and if you are doing the remodels yourself, the yield can be high.
Disadvantages: There is a lot of risk and variables involved, including problems that may occur immediately after purchase. You are often taxed heavily on your profits.
(A Kitchen Remodel can cost 10k and yield a 20k increase in value)
Advantages: This is a great way to get a high rate of return by paying cash to get a good price, sell on easy terms and receive high interest.
Disadvantages: Your cash can often be tied up for months to years
Advantages- This is a very simple way to purchase real estate with the possibility of great profits. Patience is important in this type of transaction
Disadvantages- Your capital is often tied up for a long time with no cash flow and continuous expenses (such as taxes)
Advantages: This is often the most profitable way to purchase real estate. When living in the house you remove an expense from your life, an extra mortgage payment. New tax laws are also advantageous to the owner. Tax rates are much lower than a fixer-upper, so long as you make it your primary residence for two years.
Disadvantages- You move, a lotâ€¦
Author: Paul Faucher
Image By:Mirage Floors Author does not endorse nor represent Selling Tampa Bay LLC
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