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| Categories of Real Estate Investment |
Below are ten categories of real estate, and different ways to
invest in them. The best one for you is something only you can
decide, according to your particular needs. To help you do that,
I list a couple good points and bad points for each type.
1. Renting single family homes. Good points: An easier way to
get started, and good long term return on investment. Bad
points: Being a landlord isn't much fun, and you typically wait
a long time for the big pay-off. You also lose all your income
when a house is vacant.
2. Fixer-uppers. Good points: Fast return on your investment,
and it can be more creative work. Bad points: More risk (many
unpredictables), and you get taxed heavily on the gain.
3. Low income housing. Good points: Similar to any other
rentals, but with higher cash flow. Bad points: Similar to |
any
other rentals, but with more repairs and tenant problems.
4. Selling rent-to-own houses. Good points: If you buy, then
sell on a rent-to-own arrangement, you get higher rent, and the
buyer is usually responsible for maintenance. Bad points:
Bookkeeping can be tricky, and most tenants don't complete the
purchase (this can be an advantage too, but it does mean more
work for you).
5. Commercial properties. Good points: Multi-year triple-net
leases mean little management and high returns. Bad points: A
tough market to break into, and you can lose income on vacant
storefronts for a year at a time.
6. Land, split and resold. Good points: Simpler than some real
estate investments, with the possibility of great profits. Bad
points: It can be a slow process, and you have expenses, but no
cash flow while you |
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wait.
7. Boarding houses. Good points: You'll generate more cash flow
renting a house by the room, especially in a college town. Bad
points: You'll generate more headaches renting a house by the
room, especially in a college town.
8. Invest cash, sell with terms. Good points: A high rate of
return is possible by paying cash to get a good price, and
selling on easy terms to get a high price AND high interest. Bad
points: You need a lot of cash, and you tie up your capital for
a long time.
9. Invest, live in it, sell it. Good points: 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
points: You may become attached to your investment, and you'll
have to move a lot.
10. Pure speculation. Good points: You can make |
large profits
buying in the path of growth and holding until values rise, and
it is a low-management investment. Bad points: Growth in value
isn't always predictable, you have expenses with no income while
you're waiting, and transaction costs can eat much of the
profits.
There are many ways to invest in real estate. These ten are just
to get you thinking about what is possible, and what type of
investing suits your personality. Once you figure that out, you
may want to look into other categories of real estate investment.
About the author:
Steve Gillman has invested in real estate for years. To learn
more, get a free real estate investing course, and see a photo
of a beautiful house he and his wife bought for $17,500, visit
http://www.HousesU
nderFiftyThousand.com
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