There are so many facets of property investment that getting into that world can seem daunting. Whether you are a real estate agent, someone looking to generate passive income on the side, or a full-time investor, there are a lot of ways to go about being successful in real estate. Even investing itself has quite a few different categories that you could consider investigating.
There are those who fix and flip houses, buying them low and selling them after they put in repairs. These people rely on buying properties whose owners either don’t want to make repairs, or have problems that scare away potential buyers. They calculate the final value of what they will sell, take away the costs of the repairs, and then pay a percentage of the value minus repairs, normally 60-80%.
Some people buy wholesale properties and set out overall criteria but are less concerned with specifics, like wood flooring or granite countertops, and more concerned with numbers, like income potential, maintenance costs, insurance pricing, and things of that nature. This can vary, depending on if the buyer is looking to rent the properties or resell them on the market.
Buying to Rent
If an investor is looking to rent their properties out, they will be paying strict attention to the numbers involved. There will be less emotional attachments, and like flippers, less attention paid to issues that scare away young couples looking to buy their first home. There will likely be less of a focus on single-family homes, and more focus on multifamily complexes.
There are also those that are looking to dip their toes into investment, and these people tend to be more concerned with the little details, and more likely to be unsure of whether they are even going to move forward after they have finished searching. They are more likely to get caught up in the details. For first time investors, an option to offset this is best to buy a duplex or quadplex, so you can have multiple streams of income and one vacant unit will not bankrupt you.
Long Term Investors
Some people who buy up properties, wholesale or otherwise, don’t flip their product based on the added value they contributed to the property, but based on long-term home values, and will hold on to properties until they can get the best deal. This can be one of the more risky types of investment in the short-term. But long-term, more land isn’t being made, so values will most likely go up over time. Investors will be vulnerable to market volatility in the meantime, so they should ensure that they have adequate capital if taking this route.
Find Your Niche
Whatever types of properties you focus on (as an agent or an investor), the best thing you can do is to find your niche. This applies to fixers, wholesalers, those who do this on the side, and all those in between. Whether you specialize in small affordable studios, large family homes, or just apartments, finding your niche can be helpful, especially as an agent.
If you would like more information about residential real estate investors, contact The Damron Group REALTORS, located in San Marcos, TX.