Did you know that there are several ways to invest in real estate in the greater Austin area? You heard that right! Let’s take a look at the most common ways to invest in real estate.
When you buy a home as your primary residence, you are investing in real estate. There is a distinction, however. When you own your home, you won’t increase your monthly cash flow or actively make money.
A rental property (or properties) is another way to invest in real estate. In this case, the rental income you collect from tenants becomes an additional revenue stream that can add thousands of dollars to your yearly income. Selling the home in an appreciating market can also turn your equity into a nice profit someday. Renting out a property doesn’t come without challenges. Rental income may not be consistent from month-to-month, and there could be seasons when the property is vacant. Be sure to consider the added expenses of general maintenance, repairs, and insurance, too. (If you have a question about managing a rental property, reach out to me anytime.
When House Flipping, the key is to buy low. While it’s a quicker way to make money than relying on rents and it can be a lot of fun, there’s always a risk that you won’t make money on your investment. There’s also a chance that the improvements will cost more than expected. Flipping requires time and effort, so be sure to consider this carefully before buying a house to flip.
Real estate investment trusts, or REITs, are not as common as the previous three examples. These are trusts or companies that finance or own real estate investments, and they sell shares to investors. In turn, the investors hope to earn a percentage of the income made from that real estate investment. REITs are more of a “hands-off” example of real estate investing, and the downside is that you don’t have any say about the decisions made regarding the property or properties.
Could this year be the year you invest in real estate? If you have questions about the different types of real estate investing in the greater Austin area, give me a call. I’m always happy to help.