Everyone is looking for a little financial innovation as a way to make some cash to supplement their income. Some turn to stocks, while others turn to real estate. Investment properties can be a great source of income, but are they right for you? Join us today, as we try to help you answer this question!
In the world of real estate, there are two different types of real estate properties: “flippers” and rentals.
“Flippers” are what they sound like—someone buys the home, either fixes it or holds on to it until the market is great, and then sells it for a higher price than what they bought it for. On the other hand, rentals are just another home you have and rent out—think of it as a constant stream of income. Both can be great options, but you may fund one more lucrative than the other.
One of the biggest cons about “flipppers” is the time and effort that go into the whole process. Some people scour the market looking for an absolute bargain, but soon realize that the house needs a whole lot more TLC than they originally planned (and financed) for. On the other hand, there is the chance that the market does not stay constant, and you are left with the property longer than you intended. On the other hand, “flippers” have the unique advantage of huge returns, depending on how much time and effort you put into the project. If you can finance and dedicate your time to it, investing in a home to “flip” may be more worthwhile than any other investment out there.
Unlike a “flipper”, a rental property is one you plan to hold onto for quite a while, and let it be a nice complementary source of income apart from your main source. However, one downside is serving as a landlord, which requires some paperwork being filed and being responsible for damages to the house. If something breaks, it is your responsibility to fix it, and you should plan to spend more money on this one in the long run than with a “flipper.” In addition, there is the added task of dealing with renters, where some may prove to be more pragmatic than you originally intended.
Sure, both types have their pros and cons, but there is one simple question still left to answer—can you afford it. Ideally, you do not want to take a large mortgage out (nothing bigger than you had for your first home) as you may be paying more than you originally wanted. If you can swing it, and think that you have what it takes, then we say go for it! You may find out that you love it, and want to pick up another one in the not-too-distant future.
No matter what your plans are, we encourage you to stop on into our office for advice. Our agents can help you find the perfect property to help maximize your earnings, and have a little enjoyment along the way!