Ways To Invest In Residential Properties
With the recent stock market volatility, the thought of real estate investment properties may sound appealing to investors. While a good many millionaires will agree that their fortunes were made in real estate, the honest ones will also tell you that they’ve probably lost a few fortunes in real estate along the way.
Real estate investment properties can be risky, and every property purchased doesn’t always pan out to be a success. There are many risks involved in real estate investing and you would be going into battle unprepared if you didn’t take a moment to carefully study these risks and work to avoid them when planning your property investment strategy.
Each type of investing has inherently different risks. This means If you are considering different types of real estate investments, each will involve a new set of risks.
Investments can be made in various types of real estate.
Residential Real Estate - This encompasses single-family, multi-family, apartments, and vacation homes. Residential properties can be rented to tenants or sold to homeowners.
Commercial Real Estate - These properties include business or office spaces. Multi-family units can be considered commercial property depending on the number of units within the building.
Raw Land - Vacant, undeveloped properties with no improvements that require little to no maintenance would be raw land. However, new construction development can be possible with the right properties.
You can also invest in non-physical real estate investments such as a Real Estate Investment Trust (REIT) or crowdfunding platforms. These are share-based investments where you own a portion of an investment portfolio.
Residential properties are the most common and easier property investment to make a consistent profit. Some ways you can invest in residential properties:
Rental property investing does offer some risks that are unique and some that are risks in other types of property investing.
No profit - The rental income must adequately cover the expenses of carrying the property.
Bad tenant - Not only can a bad tenant cost money in collections and evictions but repairs may also be required if they become destructive.
Vacancies - aiming for short turnovers is ideal not to have to cover monthly costs without income.
Hands-on investors enjoy these types of investments. Flipping properties can present some risks that cut into your profits.
Overpaying for the property.
Underestimating the cost of repairs.
Overestimating how much work you can do yourself.
Taking too much time to complete the project.
Making a wrong judgment about the neighborhood.
Over-improving the home.
We often fail to realize that our personal home is essentially an investment. And like any real estate investment, there are risks as well.
Purchasing in an area that is not showing signs of growth.
Using unfavorable mortgage options such as adjustable rates, balloon payments, or maximizing home equity loans.
Failing to have the proper inspections before closing on a home can cost significantly in repair costs.
Real estate investments can make profits even during a real estate market slowdown, stagnation, or depression.
The SAYHAY Team can partner with investors to find the right properties for their portfolios. Contact us at 412-755-3600 to schedule your free consultation.
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