Two Profitable Types of Real Estate Investing

The landscape of the current housing market should be encouraging to both buyers and sellers. The hard times of the housing crisis are officially behind us, and Americans are feeling more confident about their job and housing prospects all the time. With mortgage rates still extremely low, a lack of housing inventory, and a steadily improving economy, home prices are continuing to rise across the country at a steady rate.

In other words, now is a great time to invest in the real estate market. If you’re looking for new ways to invest in real estate, you should consider either fix and flip investing or buy and hold investing.

Rehabbing Homes

House flipping has been glamorized by a number of television shows, and in fact it can be quite dramatic. House flippers have to be quick and aggressive in their decision making, as they frequently compete over the same houses. It certainly isn’t a job suited to everyone, but if you’re looking for an exciting challenge that offers exceptional return on investment, house flipping might be the right way to go.

How flippers have to do a lot of research. They need to be good at running the numbers and figuring out exactly which neighborhood, which home type, and which renovations will lead them to the best profits. Their goal is to find homes that are undervalued for their neighborhoods and that could dramatically increase in value with simple, usually cosmetic changes.

A lot of house flippers look specifically for rundown or foreclosed properties, but a growing segment of flippers are focusing on higher-end properties. In the posh neighborhoods of San Francisco and San Jose, for example, house flippers are currently making an average of over $100,000 gross profit per flip.

Rental Real Estate Investing

One of the downsides of house flipping is that it often becomes a career. If you’re looking for investments that won’t take over your life, buy and hold investing might make more sense for you. Buy and hold investors purchase apartment homes or single-family homes when the market is favorable, then rent those homes for a number of years. When the market is right, they resell their investment properties at a profit while also enjoying all of the rental income that they’ve earned in the intervening years.

Many buy and hold investors manage their own properties; looking for tenants, handling repairs, and collecting rent on their own. However, you can make buy and hold investing even easier for yourself by entrusting all of those duties to a property management firm. With the right buy and hold loans, you could maintain several investment properties at the same time, earning ample monthly income while watching your investments grow, all while maintaining a career or enjoying your retirement.

The current marketplace is particularly primed for rental real estate investing, because both home prices and rent prices are on the rise across the country. Rental real estate investors tend to do best in urban areas that attract a lot of young professionals, such as Austin, Los Angeles, or San Francisco.