Advatages and Disadvantages - 10 Ways to Invest in Real Estate

There are different types of real estate, and different ways to invest in them, and it is essential to combine these two factors in a means that suits your particular needs. Here are a few possibilities to consider, with their advantages and disadvantages.

1. Rental Houses.

Advantages: Easy way to get started, and reliable long-term return on investment.

Disadvantages: Being a landlord is tedious, and you generally wait a long time for the big pay-off.

2. Rent-to-own Houses.

Advantages: When you buy, then sell as rent-to-own arrangement, you get higher rent payments, and the buyer is usually responsible for maintenance.

Disadvantages: The bookkeeping is tricky, and most tenants don't complete the purchase (this can also be an advantage, but it means more work for you).

3. Low Income Rentals.

Advantages: The same as any other rentals, but higher cash flow.

Disadvantages: The same as other rentals, but more repairs and tenant problems.

4. Fixer-Uppers.

Advantages: Quick return on investment, and more creative work.

Disadvantages: Higher risk (unpredictability) and heavy taxes on the gain.

5. Buy for Cash, Sell for Terms.

Advantages: High rate of return by paying cash for a low price, and selling on easy terms to get a high price and high interest.

Disadvantages: Tying up your capital for a long time.

6. Buy Land, Split it and Sell it.

Advantages: Simpler than most real estate investments and has possibility for high profits.

Disadvantages: It can take a long time, and you have expenses and no cash flow while you wait.

7. Boarding Houses.

Advantages: You can get a lot more cash flow renting a house by the room, especially in a college town.

Disadvantages: You can get a lot more headaches renting a house by the room, especially in a college town.

8. Commercial real estate.

Advantages: Long term triple-net leases mean little management and high returns.

Disadvantages: Tough market to get into, and you can lose income on vacant storefronts for a year at a time.

Find more information on commercial real estate investing.

9. Buy, Live in it, and Sell.

Advantages: The new tax law means you can fix it up and sell for a big tax-free profit after two years, then start the process again.

Disadvantages: You have to move frequently.

10. Speculation.

Advantages: Buying during growth and holding until values increase and yield large profits, especially if you buy low.

Disadvantages: Prices are unpredictable, you have expenses with no income while you're waiting, and transaction costs can eat much of the profits.

Learn more about real estate speculation.

 

 

 

Like this page? Email it to a friend.
	Your Name: Your Email: Friend's Name: Friend's Email: The information obtained in this form will only be used to notify the recipient of sender's identity.