Buying a home for yourself can be a great long-term investment, but there are other ways to use your credit to invest in real estate. By approaching real estate as a business opportunity, you can turn your property purchase into a lucrative source of income. If done correctly, this can give you the resources to live the lifestyle of your dreams, whether that involves frequent camping and fishing trips, spending your free time at ski resorts, or improving your golf game.
This is one of the most popular ways to make money in real estate, and that’s because it works so well. It involves buying a house that requires updating or renovating, doing the work, and reselling the home at a price that’s higher than the original sale price and the cost of the renovations. Due to the investment this method requires in both time and money, it’s important to choose your property wisely. The ideal investment is a debilitated home in an upscale or trendy neighborhood. This gives you the best chance for a high return on your investment. Rick Janson, Jamie Sprouse and Veronica Montoya are your “go to” agents for assistance in picking a property, assessing it, finding money and contractors to renovate it and to sell it for top dollar with the best marketing in town. Call 303-589-2320 today to schedule a free coaching call on how to find, assess, fix and flip a property.
Real Estate Investment Trusts
This can be a great way to invest in real estate without getting your hands dirty and without exposing your capital to the high risks of direct investing. Here, you invest your money with a firm, which manages multiple real estate portfolios. Depending on the real estate investment trust, also known as REITs, you can invest in residential or commercial real estate. Typically, residential investments appreciate at approximately 4.1% over the rate of inflation, while commercial real estate investments beat inflation by a 4.9% rate. REIT investing can give investors the opportunity to see a good ROI, while also helping them learn and amend their investment strategies.
A relatively new trend is to invest in non-performing notes or mortgages in which the buyer has fallen behind on their payments. In these cases, the property hasn’t fallen into foreclosure yet, and the lender may simply want to avoid that step by selling the debt to a private investor. It should go without saying that there’s a high risk involved in this type of investor, because the homeowner won’t be any more motivated to pay you than the commercial lender. You may still have to go through a lengthy foreclosure, but, because the lender sells non-performing notes at a discount, you can come out ahead, if you can get the homeowner to pay.
Turn Key Rental Properties
If you’re not particularly handy with home improvements, this may be the best way to begin your real estate investing career. Turn key rental properties are residences or apartment complexes that have already been flipped or renovated and have tenants occupying the units. As the investor, you simply step in and take over the business, retaining tenants and any property service personnel, such as maintenance workers, already on staff. This is especially ideal for couples looking for a retirement investment or someone looking for a source of passive income.
Depending on your location, buying a property to lease out as short-term vacation rentals can be very lucrative. Even if you have to renovate the property, you can recoup that investment in very little time. It will require maintaining the property and keeping it as enjoyable for tenants as possible, but the same is true of any rental property. Your customers will appreciate the value more and take better care of the property than long-term tenants, as well. The trick with buying a property to use as a vacation rental is to ensure it’s in a desirable location. Something near ski resorts, golf courses, and other popular destinations would be ideal. Using sophisticated algorithms, we can accurately analyze the Airbnb potential of any active listing in Summit County, Eagle County or Grand County and assist you with your purchase. Call 303.589.2320 to learn more.
Essentially, this involves renting out rooms within the home and allowing all of the tenants to share the living spaces as common areas. The benefit here is that you can earn more than you would from a single tenant and, if you so choose, you can even occupy one of the rooms yourself. This can be a great way to get started in the rental game because it lets you gain the experience of being a landlord while maintaining a close eye on what’s going on with your tenants.
There are many more ways to use your savings to invest in real estate and these types of investments often represent far less risk than investing in stocks. However, any investment requires research and an ability to develop sound financial strategies to avoid unnecessary losses. When you take the time to learn about each investment and the market within your area, you can maximize your ROI and build a lucrative passive source of income.
Looking to buy a house in Denver? Search our listings to see what’s available! Also ask us about our NEW tool that assesses active listings for their cash-on-cash and cap rate of return based on renting out traditionally or via Airbnb. Our ability to analyze a property is unparalleled. We can even search the MLS based on your desired rate of return… ask your buyer’s agent if s/he can do that. If she or he can not, cancel your contract and call us at 303.589.2320.