Being a full time investor is a dream of many people that we know. Reading financial report, looking at different investment opportinities, managing your portfolio, evaluating companies and managing large amounts of capitol seems like a dream come true to many people. Imagine the time flexibility, the financial security and the opportunity to do what you always wanted all in one place. Sounds pretty good doesn’t it?
Most people believe that to become an investor, especially a full time investor you will need a lot of money. It is true to a certain extant. However there are ways to becoming an investor and eventually a full time investor with a little capitol start. That way is investing in real estate. Buying houses, condos, multifamily dwellings, land, commercial properties etc is a great way to make money. In fact there are a lot of self made millionaires who started out investing into real estate.
In this post we will talk about different ways of investing and profiting from the residential real estate. Residential real estate includes houses and condos (apartments).
There are quite a few different strategies of investing money into the residential real estate. First of all how do you find real estate to invest in? You can start by looking on cragislist.org, typing into google a website for local real estate for example – houses for sale in Vancouver, joining an investment club (to find an investment club around you go to meetup website and type in “real estate investment club”) to get the process started. We would also suggest talking to some past investors or real estate agents in your area.
So what are some of the different investment strategies in the residential real estate?
You can buy a rental property. Basically buying a property for a sole purpose of having it rented out to a tenant on a lease. Make sure the your property is cash-flow positive. Meaning the rent you charge your tenant covers your mortgage payments (if you have mortgage on the property). Also make sure to check how much are the property taxes, and maintance fees (if it’s a strata property). You should also think about becoming a landlord. Are you willing to manage the property by yourself of would you hire a property management company to help you? If so your should take into account the property management company’s fee.
If you are choosing the rental route, there are two ways of going about it. Number one: you could do long term rentals (6 months +). Most long term rentals require tenants to sign a lease for at least a year.
Another way your could go about renting out your house or a condo is doing short term or excutive rentals. This rentals are only a couple of days or weeks long. This strategy might not work well in smaller cities where there isn’t much demand for the short term rentals. With short term rentals your condo or a house needs to be furnished, cleaned and should have some dishes for the people to cook and eat food. With the popularity increase the of the websites like AirBnB it is a lot easier to rent out your condo or a house on a short term basis.
The downside of short term rentals is the fact that you will have to clean the unit after each “tenant” which could get a little tiring. Just plan for that in advance and you will be fine.
Another way to invest into real estate is to flip properties. This strategy works better with house however there is a lot of opportunities flipping strata properties or condos. So what is flipping a property? Basically, you buy a property in a need of a renovation. Renovate the property and sell it for a higher amount. Now, flipping properties is not as simple and easy as it used to be. The buyers are much more educated now.
Finding the right property to invest in is the key. Avoid multiple offers, as these are usually the situations in which most people overpay.
Another way to invest in real estate is to build houses. You can find empty lots in desirable areas of your city. Lots with old tear-down houses would work too. Invest some money into getting appropriate permits to build a new home and get to work. This usually requires some technical knowledge. Building houses is also a little risky especially if you’re just starting out.
If you have done a few flips or invested in a couple of rental properties you might consider buying into a multifamily development or an apartment building. Having one building could provide you with a great revenue. Plus in a few year you could re-finance your real estate investment and invest the money into even more real estate. We will write more on that subject later.
We hope you find these real estate investment strategies helpful and you can apply them to your own life. Best of luck with your investments. Please, share this article on social media if you found it interesting. Leave a comment below of your favorite real estate investing strategy.