Investment Property: Ways to Profits in a Recessed Real Estate Market

Investment property encompasses real estate used to produce income. Several types of property exist and generate profits at different paces. For example, house flipping creates profit only once, while rental properties provide monthly cash flow.

It is important for investors to decide which type of investment property is best suited to their needs. Some real estate investors focus on a specific niche, such as rental properties. Other investors diversify and acquire a mix of physical properties and real estate notes.

Investors looking for long-term investments might consider rental property. Rental houses bring in regular income as long as tenants are in place. The key to making money with rental homes is to carefully screen tenants and charge rental rates according to market conditions. If not, properties could sit vacant and create negative cash flow.

Investors that desire quick cash investments might consider wholesaling and house flipping. Wholesaling involves buying real estate at wholesale prices and reselling the property in “as is” condition for profit. House flipping involves buying houses in need of repair at discounted prices, fixing them up and selling for profit.

Flipping houses is almost a thing of the past because the real estate market is oversaturated with discounted properties. However, there are still deals to be made in this niche. The goal is to buy below market value, renovate, and sell the investment property for profit within a few months.

House flipping investment profits can range from a few hundred to several thousand dollars. Much depends on the property type, location, purchase price, cost of repairs, and sale price. Investors that embark down this path should be financially prepared to hold real estate for extended period of time if the property cannot be sold for profit.

There is no doubt the housing market is currently a mess. Home mortgage loan credit restrictions have made it difficult for many buyers to obtain financing. Mortgage lenders are hanging on to distressed real estate in hopes of obtaining a higher sale price when the market stabilizes. These factors combined have reduced the number of available real estate investing opportunities.

What does this mean for real estate investors? It means investors need to work smarter to find profitable investment property. Working smarter begins by developing relationships with other realty professionals. Networking helps investors gather information and locate investment opportunities more efficiently.

Investors who engage in careful market research and network with real estate professionals can reap profits in any economic market. Investors that make informed choices can set the stage to reap profits when the market rebounds.

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