Categories Of Real Estate Investment 
Categories Of Real Estate Investment
Below are ten categories of
real estate, and different ways to invest in them. The best one for you
is something only you can decide, according to your particular needs.
To help you do that, I list a couple good points and bad points for
each type.
1. Renting single family homes. Good points: An
easier way to get started, and good long term return on investment. Bad
points: Being a landlord isn't much fun, and you typically wait a long
time for the big pay-off. You also lose all your income when a house is
vacant.
2. Fixer-uppers. Good points: Fast return on your
investment, and it can be more creative work. Bad points: More risk
(many unpredictables), and you get taxed heavily on the gain.
3.
Low income housing. Good points: Similar to any other rentals, but with
higher cash flow. Bad points: Similar to any other rentals, but with
more repairs and tenant problems.
4. Selling rent-to-own houses.
Good points: If you buy, then sell on a rent-to-own arrangement, you
get higher rent, and the buyer is usually responsible for maintenance.
Bad points: Bookkeeping can be tricky, and most tenants don't complete
the purchase (this can be an advantage too, but it does mean more work
for you).
5. Commercial properties. Good points: Multi-year
triple-net leases mean little management and high returns. Bad points:
A tough market to break into, and you can lose income on vacant
storefronts for a year at a time.
6. Land, split and resold.
Good points: Simpler than some real estate investments, with the
possibility of great profits. Bad points: It can be a slow process, and
you have expenses, but no cash flow while you wait.
7. Boarding
houses. Good points: You'll generate more cash flow renting a house by
the room, especially in a college town. Bad points: You'll generate
more headaches renting a house by the room, especially in a college
town.
8. Invest cash, sell with terms. Good points: A high rate
of return is possible by paying cash to get a good price, and selling
on easy terms to get a high price AND high interest. Bad points: You
need a lot of cash, and you tie up your capital for a long time.
9.
Invest, live in it, sell it. Good points: The tax law lets you fix it
up, and sell it for a big tax-free profit after two years (if you live
in it), then start the process again. Bad points: You may become
attached to your investment, and you'll have to move a lot.
10.
Pure speculation. Good points: You can make large profits buying in the
path of growth and holding until values rise, and it is a
low-management investment. Bad points: Growth in value isn't always
predictable, you have expenses with no income while you're waiting, and
transaction costs can eat much of the profits.
There are many
ways to invest in real estate. These ten are just to get you thinking
about what is possible, and what type of investing suits your
personality. Once you figure that out, you may want to look into other
categories of real estate investment.
Source: http://www.re-estate.com/en/article/371/
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