So you want to invest in real estate but are not sure where to start?
First thing you need to ask yourself is, what kind of investing do I want to do? Do I want to cash-flow, hold and build wealth, flip or a combination? If your asking yourself, which is the right one? You're not alone. The right one is the one that works with the amount of money and time you have to devote. Let’s take a look at all the different ways to invest in residential homes.
Cash Flow – This is all about making money on a monthly basis. So your rents exceed your expenses monthly. This can be tricky to find properties that cash flow well. A good agent or 2, can help you find that investment. Your best bet is to buy low, of course but also think if you can rent the garage or maybe it has a mother in law suite. Maybe you can buy near the universities and rent per room. There are many options to this.
Buy and Hold – This strategy is exactly as it sounds. If you’re looking for this then you want to buy in a nice established neighborhood or even better an up and coming neighborhood. We can help you decide where that is. This is the easiest strategy. It takes little time and effort. You buy real estate and get a management company to look after it. In 20 years you sell and make 100’s of times more money then you put in. Your ROI is very high here.
Flip or Rehab – This is the most time intensive and experience needed form of investing. Here you need to make your money when you buy. Buy low. Figure out how much it would cost to do the basics in renovations. Then sell for market value, do not get greedy here. Sell for fair market value and move onto the next. A 3 month flip is a great time-line. This takes a lot of organization. It takes money. And you need to stick to your budget and time-line. This can be very rewarding if you do it right.
Now that you have chosen your investment style. The next is to act on it. How do you fund it? That is a question we asked and get asked a lot. There are many ways to buy residential real estate in. There are still assumables out there. Some sellers will do a vendor buy back. In essence the seller loans you the down payment. If it is your second home you can do as little as 5% down. If it is your 3rd or 4th then you might have to give as much as 20%. If you structure the deal right and make the seller happy, they will usually do whatever to get the deal done.
To end off. Investing in real estate is an amazing way to make money. Most of the millionaires in the world made or keep their wealth in real estate. There are options for everyone. Think about it. Where else can you get hundreds of thousands of dollars in loans with as little as 5% down? Nowhere. If you count leverage into the equation then investing in property is a no brainer.