Despite its lucrative earnings potential, investing in residential real estate can be a daunting idea for many. After all, the real estate market is unpredictable, and initial investment requirements can be expensive. Still, if you’re interested in investing in residential real estate, there are several options that are worth considering.
Renovate and Sell
Renovating and selling, a.k.a “flipping”, your property is very common. Many popular televisions shows in recent years have created the perception that flipping is fun, easy and anyone can do it. Don’t be fooled. Like anything else, to be successful in the long run requires hard work, expertise and in the case of flipping, access to capital. With that said, if you are willing to invest the time, effort and capital, house flipping can potentially produce very high returns in a relatively short period of time.
It can also produce devastating losses to those not willing to become a market expert. If you believe you have what it takes to flip a home, start conservatively. Look to the lower end of the market for a property that will not break the bank if you end up having to hold it longer than expected. Create a great team and stick with them. At a minimum, your team should include a realtor, contractor(s), a home inspector, a banker, an insurance agent, and an attorney.
Last bit of advice, find a mentor. Find someone in your market or another that is willing to teach you the ropes. Books are a great start, but learning in the real world is the best way to go. Consider working with a real estate agent who will be able to make recommendations on the types of upgrades and renovations that will yield you the best return on investment.
Rent It Out
Another option to consider when it comes to residential real estate investing is buying and renting. When done right, this option gives you the benefit of an income stream and future appreciation. It can truly be a best of both worlds scenario. This is also a great solution for that potential gap of time between when you finish renovations on a home and when you’re actually able to sell it. For example, you may find that the real estate market is better for buyers by the time your renovations are done and therefore choose to rent it out monthly until the market turns back around in favor of sellers. In the meantime, the monthly rent you charge can cover the mortgage and then some, providing you with a nice rental income. Once again, a good real estate agent who specializes in your market can be a great source for finding the perfect home to rent out.
Get Into Development
Finally, if you really want to dive into residential real estate investment, consider developing your property. Your empty plot of land can be developed in the form of single-family housing, condos, townhomes, or rental units. The nice thing about developing your own piece of land is the fact that it tends to increase in value in a short period of time—especially in a popular and growing area like Greenville. While you will need more capital upfront for this type of real estate investment, it is also worth noting that the long-term payoffs are substantial. Not comfortable navigating the nuances of real estate development? Consider partnering with an experienced developer to minimize your risk.
These are just a few of the best options when it comes to residential real estate investment. No matter which option you choose, we understand that putting your hard-earned money into real estate can be a bit intimidating. That’s why the professionals at The Parker Group are here to help you through the process. We offer consulting services to help you reach your investment goals, working with you from start to finish. Contact our team today to get started!