There are many ways to invest in real estate. The first thing we should probably do is invest in purchasing your own home. Once you’ve done that, you’ve got other options!
- One – Become a landlord! You can make a reliable income by owning a rental property.
- Two – While the risk is a little higher, investing in a rental property that rents out short-term rentals.
- Three – Flipping properties.
- Four – Investing in companies like Pacaso allows you to purchase shares in a home.
Becoming a landlord
You need to make sure you’re comfortable in that role. To be the most cost-effective, you’ll need to handle your own property management which includes maintaining your property, finding tenants and dealing with problems. It’s not always easy and definitely not always fun. It may be worth hiring a property manager but keep in mind that will take money out of your bottom line, which might not be worth it to you.
Airbnb and other short-term rental properties
While you can get an extremely high return, you also run a higher risk. You need to make sure that you continually fill vacancies, you need to make sure that you’re able to turn the property each time a renter leaves, and you need to make sure that the city ordinances allow for this type of rental.
While it’s lucrative, it’s advisable to imagine worst-case scenarios on these and make sure that if you did decide to turn it into a long-term rental instead, that the rent would carry the mortgage as well as any maintenance and repairs needed. Another thing to remember is that short-term rentals require a different kind of home insurance so make sure that’s in place!
Flipping properties can give you a great return! Everyone seems to want to do this these days. While it can give you a great profit, keep in mind that there are lots of moving parts. You need to find homes that are in need of repair and that you can obtain for below market value hopefully. You’ll need to find a crew to help with the renovations.
You need to manage these renovations to ensure that you don’t go over budget which will decrease your profit. And you need to do all of this in a short period of time to make sure that the market doesn’t turn down, leaving you with a property that you owe more on than it’s worth.
Investing in companies like Pacaso
While companies like Pacaso are pretty new, it’s another option to purchase a home as a co-owner. Companies like this create LLCs for properties and owners retain a percentage of interest in a home. While this isn’t ideal for everyone, it does give people an option to obtain some sort of homeownership!
In each one of these scenarios, there are lots of moving parts. The Stern Team is extremely experienced in these options with many of their team members involved in investing and flipping homes. We’ll be sharing our knowledge during a free seminar on Saturday, Jan. 22 from 10 a.m.-12 p.m. We’ll have our flipper agents, agents that own investments and a property manager as well! Sign up here for this free event – we’d love to help you with the first step of investing in real estate. That first step is learning about your options and we’d love to have you join us!
If you’re ready to buy or sell a home, the Stern Team can help. Visit The Stern Team or call 801-609-3298.