The Two Best Ways to Invest in Real Estate

If you are looking for some quick and easy income and you have good credit, real estate investments may be for you. There are two main ways that you can invest in real estate for profit. You can purchase a home that needs work and resell it at a profit, or you can purchase a home or multi family dwelling that can be rented out for easy monthly income. There are advantages and disadvantages to both.

 

Flipping Properties

 

When you buy a run down home and turn it over for a profit it is called flipping a property. Flipping properties can be very profitable. However, you have to consider many factors before you invest in this type of real estate deal.

 

First, you have to consider the condition of the property. How much money will it take to get the place up and running in order to sell it? This is a huge factor in how much profit you will be able to make off of the property. Getting a house for ten thousand is a great deal, but when you have to put forty thousand dollars into it to get it liveable and in good enough shape to sell, you aren’t going to make much of a profit.

 

You also have to consider the current property values in the area. No matter how nice a house is, it will only sell for so much on the market based on the property values in the surrounding area, as well as other economical factors. Consider carefully how much money you might be able to sell the house for once it is fixed up.

 

The advantage to all of this is that you get your profit in one lump sum, giving you immediate cash as soon as you flip the property. You can then use this cash to live on, buy things for yourself, or reinvest in another real estate deal. The disadvantage to flipping properties is that the money is often gone quickly, and there is no lasting income to support you.

 

Renting Properties

 

Renting properties has its own advantages and disadvantages. When you purchase a property for the purpose of renting it out, you should carefully consider how much your mortgage payment will be versus how much you can feasibly charge for rent. This will determine how much profit you will make each month. For many people, it is necessary to hold several rental properties in order to make enough money to live on.

 

The advantage to renting properties is that you gain a monthly income out of the deal. Even if you don’t get enough to live on, it can be enough to supplement the other income you have. However, there are many disadvantages to becoming a landlord as well. You have to be responsible for all the repairs that need to be made to the home, which can cut into your profits. You also have to carefully screen your tenents, collect the rent, and manage your finances, preferably with the assistance of a property management company or accountant.

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