Categories Of Real Estate Investment
Below are ten groups of real estate, and different ways to invest in them
. The best one for you personally is something only you are able to decide, according to your particular needs. To assist you do that, I listed a couple of great points and poor factors for each kind.
1. Renting single family homes. Great factors: An simpler way to get started, and good lengthy term return on expense. Poor factors: Being a landlord isn't much fun, and you typically wait a lengthy time for the large pay-off. You also shed all your income when a house is vacant.
2. Fixer-uppers. Good factors: Fast return on your expense, and it can be more creative work. Poor factors: Much more risk (numerous unpredictables), and also you get taxed heavily on the gain.
3. Low income housing. Good points: Similar to any other rentals, but with greater cash flow. Bad points: Similar to any other rentals, but with much more repairs and tenant problems.
4. Selling rent-to-own houses. Great points: Should you purchase, then market on a rent-to-own arrangement, you get higher rent, and the buyer is usually responsible for maintenance. Poor points: Bookkeeping could be tricky, and most tenants don't complete the buy (this can be an advantage too, but it does mean much more work for you personally)
5. Commercial properties. Great factors: Multi-year triple-net leases mean little management and higher returns. Bad factors: A tough market to break into, and you are able to shed income on vacant storefronts for any year at a time.
6. Land, split and resold. Great factors: Simpler than some real estate investments, with the possibility of great profits. Poor factors: It can be a slow process, and you have expenses, but no cash flow whilst you wait.
7. Boarding houses. Good points: You will create more money flow renting a home by the room, especially in a college town. Poor factors: You'll create more headaches renting a home by the room, particularly in a college town.
8. Invest money, sell with terms. Good factors: A higher rate of return is possible by paying money to obtain a good cost, and promoting on simple terms to get a higher cost AND higher interest. Bad points: You need a lot of cash, and you tie up your capital for a long time.
9. Invest, live in it, sell it. Good factors: The tax law lets you fix it up, and sell it for a large tax-free profit after two years (should you live in it), then begin the process again. Bad points: You might become attached to your expense, and you'll need to move a great deal.
10. Pure speculation. Great factors: You can make big earnings buying in the path of growth and holding until values rise, and it is a low-management expense. Poor points: Growth in value isn't always predictable, you have expenses with no earnings whilst you're waiting, and transaction costs can eat a lot of the profits.
There are lots of methods to invest in real estate. These ten are just to get you thinking about what is possible, and what kind of investing suits your personality. Once you figure that out, you might want to look into other groups of actual estate investment.
by: Billy Edward
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