Are you looking for a rental property, a vacation home or a quick flip? Budding real estate investors have a number of options when it comes to making money, but each choice brings with it a wildly different strategy and approach.
So, if you want to break into this industry, you must first decide what type of investment property you want. A rental property means becoming a landlord - buying a home, fixing it up and renting it out right away for a profit. A vacation home is a long-term strategy - you can invest here, spend a few months a year there, or rent it out a couple times to make some money. After several years, you either sell for a profit or move in permanently. For a quick flip, you can buy a home for cheap, fix it up and then sell it again to make some cash.
All of these options are viable, but each is unique. In order to help you figure out how to best proceed in the real estate investment industry, here are a few tips and tricks:
Learn the methods behind the options
Figuring out what you have to do in order to invest in real estate can help you decide the best course of action. Take rental properties and vacation homes, for example. Each of these are very different, but both could be the right step for you.
In an article for Realtor.com, Annie Miller wrote that buying a home to rent is a good idea for young professionals and businesspeople who want a relatively fast return on their investment. This can also be a smart idea for people who don't want - or already have - a second home. The best in this industry often buy more than one house as well, typically near their places of residence so they can act as effective property managers.
On the other hand, a vacation home can be a smart way to invest in real estate. Miller explained that it is a long-term strategy, where investors buy a home, spend vacations there each year and maybe rent it occasionally for extra income. After several years go by, you could either move in completely - such as during retirement - or sell for a profit if the market has improved.
Making your choice can be made easier with access to in-depth information. With CRS Data, that is now a simple proposition, thanks to mortgage records, property data and much more right online. Learn more about the CRS Data Real Estate Suite to get ahead in the industry.
What to look for when buying a home
When you have decided how you want to get involved in real estate investing, you then need to determine where you want to buy. If being a landlord is in your future, picking a property close to your current home is smart, but not necessary.
In an article for Investopedia, Andrew Beattie wrote that the first thing you should choose is the neighborhood. Picking the right location can impact your profits, so consider a nicer or up-and-coming area, ideally in a good school zone with fairly easy access to commercial zones. In addition, try to find a place that also has affordable property taxes, as higher ones can eat into your bottom line.
If you are aiming to be a landlord, make sure you look into average rents in the area as well, Beattie noted. If charging a typical rate to your tenants won't cover your mortgage, then the home isn't right for you. So, do research ahead of time to ensure you are on the right track with your investment properties.