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