10 Ways to Invest in Real Estate.
There are different types of real estate, and different ways to invest in them, and it is essential to combine these two factors in a means that suits your particular needs. Here are a few possibilities to consider, with their advantages and disadvantages.
1. Rental Houses.
Advantages:
Easy way to get started, and reliable long-term return on investment.
Disadvantages:
Being a landlord is tedious, and you generally wait a long time for the big pay-off.
2. Rent-to-own Houses.
Advantages:
When you buy, then sell as rent-to-own arrangement, you get higher rent payments, and the buyer is usually responsible for maintenance.
Disadvantages:
The bookkeeping is tricky, and most tenants don't complete the purchase (this can also be an advantage, but it means more work for you).
3. Low Income Rentals.
Advantages:
The same as any other rentals, but higher cash flow.
Disadvantages:
The same as other rentals, but more repairs and tenant problems.
4. Fixer-Uppers.
Advantages:
Quick return on investment, and more creative work.
Disadvantages:
Higher risk (unpredictability) and heavy taxes on the gain.
5. Buy for Cash, Sell for Terms.
Advantages:
High rate of return by paying cash for a low price, and selling on easy terms to get a high price and high interest.
Disadvantages:
Tying up your capital for a long time.
6. Buy Land, Split it and Sell it.
Advantages:
Simpler than most real estate investments and has possibility for high profits.
Disadvantages:
It can take a long time, and you have expenses and no cash flow while you wait.
7. Boarding Houses.
Advantages:
You can get a lot more cash flow renting a house by the room, especially in a college town.
Disadvantages:
You can get a lot more headaches renting a house by the room, especially in a college town.
8. Commercial real estate.
Advantages:
Long term triple-net leases mean little management and high returns.
Disadvantages:
Tough market to get into, and you can lose income on vacant storefronts for a year at a time.
9. Buy, Live in it, and Sell.
Advantages:
The new tax law means you can fix it up and sell for a big tax-free profit after two years, then start the process again.
Disadvantages:
You have to move frequently.
10. Speculation.
Advantages:
Buying during growth and holding until values increase and yield large profits, especially if you buy low.
Disadvantages:
Prices are unpredictable, you have expenses with no income while you're waiting, and transaction costs can eat much of the profits.