Home values have increased by almost 70% over the last five years. Given, the last two years have been crazy, but for real estate investors, the trend means one thing – solid growth. More people than ever are interested in real estate investment, and it’s not hard to see why. Select the right investment, and you could easily find predictable returns as well as a number of different tax advantages. The path to the right investment, however, isn’t always a clear one, and understanding the growth potential necessary to maximize profits can be difficult. There are methods of low cost real estate investing that ensure success, and learning those means fewer mistakes on the path toward successful investment.
A Better Understanding of Strategy
For real estate investors, there are a number of strategies you can use to obtain properties. Rental properties are perhaps the best-known strategy. Using this method, investors purchase the property, then rent it to tenants. This could be accomplished with short-term rentals – like those listed on sites such as Airbnb – or with longer-term rentals, like those that come with a six to twelve-month lease. While this is the best-known strategy, it’s not always the lowest cost strategy, as once you’ve purchased the property and rented it to others, you become a landlord responsible for maintenance, property taxes, turnover rates, and more.
While rental properties are one of the most common types of real estate investments, home flipping has grown in popularity recently thanks to a number of reality television shows like Property Brothers. For real estate investors, home flipping is one of the riskier investments, as the goal is to limit the initial investment and keep renovation costs as low as possible. Given that renovation costs can easily spiral, and it is always possible to overestimate demand in any particular area, this type of investment may go wrong quickly. The reality, though, is that it means phenomenal returns when things work well.
Perhaps the best option for aspiring real estate investors (who either have a net worth of over $1,000,000, or have an annual income of over $200,000, or $300,000 household) is real estate syndication. Real estate syndication, in simple terms, is when a group of investors purchase a property together via the “syndicator”. The syndicator does the leg work in terms of negotiations, assessing, purchasing, and managing the property. At Roy & Co. we act as the syndicator for groups of investors like you, so that you can diversify your portfolio without actually having to go through the process of negotiating, purchasing, and managing a property yourself. Investing in a real estate syndication is a fantastic way to generate passive income while also getting the tax benefits of a real estate investment.
Wholesaling real estate may also prove a fairly cheap way to invest in real estate. In this process, an investor places a contract on a home. The investor then moves forward to find a buyer at a price above the contract amount. The investor keeps the difference in profit. No renovations are required, so no extra costs are required. The only challenge in this method is finding a buyer as soon as possible.
Developing Market Knowledge
Strategy, however, is only the first step toward investing in low cost real estate. Developing a deeper knowledge of both the investment process and the market itself is also a must. The single most important thing successful investors do at the outset is to learn more about investment as a whole in the market, how it works, the potential pitfalls, and how to avoid problems.
Understanding the process is only one piece of the puzzle, though. A deeper look at the market where various investment properties are located is just as important. Today, many investors are choosing Florida, as it offers access to attractive properties with both short and long-term lease potential. More than that, though, it is easily one of the best markets throughout the United States, as thanks to low tax rates, an increase in the need for employees, and an overall low cost of living, the population is growing quickly.
Becoming an expert in the selected market’s trends, averages, and even factors like unemployment and crime rates allows investors to recognize the current status of any given market and plan for the future.
Building Your Portfolio
Low cost real estate is available throughout the United States for interested investors. Our work in the real estate investment market creates lasting value for investors. If you’re interested in learning more, please contact us today.
