If you’re thinking about trying your hand at real estate, you may be wondering where to start. There are many different types of real estate and each one will suit people differently. Before deciding on the real estate that’s right for you, you need to think about how much time you have to devote to your new investment and the type of return you’re hoping to get out of it. Here are some options:
Fixer Upper
This is an ideal option for anyone with building, electric or plumbing skills. This option is where residential properties are bought at a fairly low cost and renovations are done to improve the quality of the home. The aim is to make a significant profit in a short amount of time by selling the property for a higher amount once the work is done. The problem with this option is that you need to give a lot of your time to the project in order to finish it quickly and sell the property quickly.
Buy and Hold
This is arguably the most difficult of all real estate investments but the option that offers the longest ROI (return on investment) time. Buying and holding means you have to be willing to be a landlord and that means taking full responsibility of the property while someone else resides in it. You may be called out at inconvenient times for maintenance problems and you may have to deal with difficult tenants. The perk is that you will have a constant flow of income from renting out the property.
Commercial Real Estate
Commercial real estate is often more suited to experienced investors. Commercial properties are often large projects to take on and it can be difficult to learn how to invest in commercial real estate. This is usually ideal for businesses that want to purchase the properties they use as offices or stores etc. It can also be a great investment for anyone with a large amount of capital who is wanting to rent out office space to smaller businesses and collect rents every month. Commercial real estate isn’t the best option when you’re taking a risk for the first time.
Vacation Rental Property
Of course, the most obvious downfall of a vacation rental property is that it’s often only used at certain times of the year. However, if you use the vacation rental property income as a supplemental income, it can significantly add to your earnings. This is a great option for real estate investment beginners because it’s far easier than a fixer upper or commercial property. You’ll also get the benefit of using the property as and when you want to. The profit you receive from the rental property will pay for the property mortgage and save you from spending on a holiday elsewhere.
Real estate isn’t something you should just jump into without doing your research first. It can be a massive financial risk if you’re unprepared for everything that comes with it. However, it can also be one of the most rewarding jobs once you have a plan in place.