Have you thought about real estate as a part of your investment portfolio? Worried that now may not be the right time to invest? It is always the right time to buy real estate! Sure there are some market conditions that are more advantageous for a buyer but in general, if you purchase the right type of property, at the right time, in the right location, there is rarely a bad time to buy. Building wealth with real estate is smart, obtainable and can yield short term profits or longer-term gains.
Real estate cannot be lost or stolen, nor can it be carried away. Purchase with common-sense paid for in full, and managed with reasonable care, it is about the safest investment in the world.
-Franklin D. Roosevelt
The golden rule is to buy low and sell high. That does not mean that the right home at a premium in the right neighborhood will not end up being a great investment. It boils down to establishing your goals. Are you looking for short term gain or are you on a long term trajectory to create passive income?
Creating passive income is a great way to grow your money! Investing is a major part of building wealth, but it can be intimidating to start. It is good to remember that people will always need somewhere to live. With inflation and a growing population, property values are going to continue to climb.
Here are few things to keep in mind if you are considering getting into the real estate investment game.
What are you willing to risk for a higher payout? This determines the type of investment you go with. A higher risk real estate investment could be buying a home and flipping it.
When looking to build wealth with real estate, there are a few key strategies and types of investments to consider. Each will yield different financial gains. Some are short-term opportunities, others better for long term gains.
In many US markets, rentals are in short demand. This can be a great long-term strategy. If your rental property has a high occupancy rate, the monthly rent could pay off the mortgage. Many use this strategy to create retirement income as once the mortgage is paid, a large portion of the collected rent would be passive income. In addition, as time goes on, your rental homes will be worth more money.
Buying homes that are in need of repair, renovating and reselling is a great way to generate short term gains. I would caution that flipping homes needs to be done with care and not all renovations are good renovations. Costs on a flip project can escalate easily. Be prepared. Used good quality contractors. Work closely with your real estate broker. Look at the maximum sales price that the home could yield once renovated.
Real estate tends to gain value over time. Whether it be raw land, homes or buildings that are in need of repair, buying and holding to reap the rewards of time can be an option.
This is where you take a portion of your existing home and create rental income from it. It could be a basement or a garage apartment. You could create a long term rental property or a space that is used for a vacation rental such as an AirBnb rental. Some homes are really conducive for this type of investment. The income generated from the rental helps to pay off the existing mortgage and/or can generate some additional passive income.