You may have been dreaming about getting into real estate investment for many years, it’s something many people consider because they enjoy working with properties, there are good profits to be made, and it’s a way of earning an income independently of an employer, perhaps providing you the opportunity to drop your day job and possibly work part time or even work towards early retirement. So how do you get started with investment properties?
First Steps in Investment Properties
Your first decision when it comes to investment properties is whether you’re a flipper or a landlord. Do you want to buy rundown properties, do them up and then sell them at a profit. Or do you want to buy a property, either renovate it and then rent it out or rent it out straight away perhaps to a sitting tenant.
House flipping is usually most suitable for someone who has cash available and the skills to do renovation work themselves. You will need cash available not only for the deposit to buy the house, but also to fund the renovation work. Its worthwhile calculating the estimated renovation costs on a project first before buying the property to ensure you can complete the project with a short period of time. The longer you own a property, are paying taxes and mortgage on it, the lower your profit margin. The key to house flipping is to do it in as a short a time as possible so you make more profit in a shorter period of time.
Of course not everyone has the luxury of having money in the bank to renovate an empty property while also having another mortgage for their own home. So if you want to flip your first few properties and don’t mind living a minimal lifestyle while you do it you could either live with parents or friends, rent a small apartment, live in a trailer or motorhome, or even live in the renovation property while you do the work on it. By doing this you free up as much money as possible to renovate the property and free yourself up from other work which you would have need to cover your living costs.
Long Term Property Investment Strategy
Property investment for rental as a landlord is a longer term property strategy, and as a house flipper you may actual switch to this model for some of your properties once you have some equity so you have an income every month. If you are able to buy property cheap because it is rundown, and then renovate it before renting it out this could bring very good returns. Alternatively buying a larger property and splitting it into a multi family dwelling for rental could be another profitable route. Having multiple renters in one property means you will have a steady income even during months where you are seeking a new tenant.
If you invest well and show profitable returns you should be able to reinvest profits into more properties and slowly grow your real estate portfolio.