Real Estate Investing 101
If you haven’t already heard, 2022 is the “Year of the Tiger” which tells us that when it comes to real estate, you may need to be aggressive to get what you want. Real estate investing is a great opportunity to earn extra income and diversify your investment portfolio. Are you considering buying an investment property in 2022? Keep reading for some helpful real estate investing tips from Hudler Homes!
What is Real Estate Investing?
Before we begin, let’s take a moment to break down what real estate investing is and why so many people choose this investment tool. Real estate investing occurs when an investor purchases a piece of property to generate income from the investment. Real estate investors make money through rental income, appreciation and profits generated from activities on that property. Many people choose to invest in real estate because it allows them to create a passive income with tax advantages, plus it helps to diversify their investment portfolio. There are many ways to invest in real estate, which we are going to explore more below.
Purchasing a Rental Property
When you think of real estate investing, your mind probably goes to purchasing a rental property. Investors will select a home that they can rent out for a fixed monthly income. Part of the profit will go towards paying the mortgage, then the rest is used for property maintenance and profit. When looking for a rental property, it’s important to find a home where the combined expenses are lower than what you charge in actual rent. Plus, you want to be sure to factor in maintenance issues, like leaks or property damage. Many rental property investors also prefer to take care of the house, rather than hiring a property manager who will take part of the profits. Like our clients in the photo above, you can also buy a duplex to live in one unit and rent out the other! This will minimize their monthly housing expenses, since the collected rent will offset their payment!
Flipping Homes
If you’ve turned on HGTV, you know that “house flipping” has become a very popular investment across the country. House flipping is when an investor will purchase a property that needs some work. They will then rehab the home and sell it for a much higher price than they paid for it. Many real estate house flippers will then take the profits and buy another house to flip, creating income as they go. There are many risks associated with house flipping, like under budgeting a project or buying a property that is discovered to have more problems than you initially thought. If you have a creative side, house flipping can be a fun outlet for interior design and decorating!
Commercial Real Estate
Another consideration for real estate investing is buying a commercial property. Once purchased, the facility can then be rented or leased to other businesses to use as a single business storefront, restaurant or more. Commercial properties usually have longer lease terms, which is great for investors who want steady income from a renter. However, commercial properties are usually more expensive and require a property manager for upkeep.
Work with Hudler Homes
Are you thinking of purchasing an investment property in 2022? If you are looking for a real estate agent who knows the Baltimore area and can help you explore your options, I’d love to meet with you. Reach out to me through my website or give me a call at (302) 545-8569, and follow my blog for more home buying tips!