Last week we went over the three most common ways of real estate investing. The first being purchasing some type of multi family home where you can live there as well. Purchasing a vacation home is a second option to invest in real estate. This is perfect for some people so you have somewhere to vacation! And the third option is purchasing an investment property where you would rent the property out strictly to rent to someone else long term.
Some of the more “hands on” types of people would prefer to purchase a home to flip. What they do is purchase a home that is rundown and needs a lot of work but is for an inexpensive price. With their own abilities, these people can make major improvements on this type of home, sell it, and make a significant profit. Some people who wish to do this will partner up with others who have different abilities in making improvements. This type of situation, however, requires a different type of mortgage – such as a second mortgage or cash-out refinance. There are a few different things to be sure you look at before you make this decision.
Another option is called the “Buy, Rehab, Rent, Refinance, Repeat” method. This method is basically flipping a home and instead of selling it immediately, you rent it out. Not only would you need to be a handy person but you also have to have the ability (and desire) to be a landlord.
A real estate investment trust (REIT) is the sixth option. This option entails investing in a large scale real estate operation. A REIT operates real estate that produces income or other assets that are related. For some, this is the easiest option to invest in real estate as you do not need to deal with any mortgage, repair, or tenants. If this is the route you would like to take, make sure you do your research and look into them completely.
Each person will have a different idea as to what may be the most beneficial for them and their situation and/or the easiest. Before making your final decision, we would recommend you talk to a professional about your options and what would make the most sense for you and your financial situation.