You are generally looking for a longer term investment. Steady cash flow is key for you. There are plenty of options out there, but deciding on the right path can be challenging. Which property size is ideal for you, a duplex or triplex, or do you need more units to make the math work in your favour?
As a real estate investor, you have to ask yourself a few questions. The most fundamental of them is:
What level of involvement do I want in a real estate investment?
There is a variety of ways to invest into real estate. Not all of them require the same level of personal involvement.
• REITs, other funds (diversification)
• Trust deeds/mortgage notes (lender to a private party
• Rental Property
• Property flipping (pure value appreciation)
• Rehabs (poor condition, enhance value by renovating)
While
REITs, trust deeds etc. offer a less time consuming way to invest into
real estate, the more typical reason to ask a real estate agent for
advice would be an investment into a rental property, flipping a
property or the acquisition of a rehab. The latter can be a very
interesting alternative. By taking a property in poor condition or a
property with an issue and turning it into a marketable asset, you may
be creating additional value and reap the financial rewards.
You also have to ask yourself:
What is my goal for investing in real estate?
If
you want to create a fast return, you will be looking at a rehab or
flipping a property. If you would rather hold a property for a longer
period of time and have a steady income, a rental property is the better
choice.
Your
answer will also be different depending on whether you require a
specific cash flow, or if you can stomach longer periods without. And of
course, it will depend on your targeted return on investment. Lastly it
will depend on your emotional and personal preferences.
Generally, investment properties offer two different kinds of returns:
• value appreciation (one time gain/loss)
• rental income (regular cash flows)