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Is Investing in Real Estate a Lucrative Endeavor Worth Your Time?

Is Investing in Real Estate a Lucrative Endeavor

Many people wonder if investing in real estate is worth it. When considering the ups and downs of the real estate marketplace, most experts would say that yes, real estate investments have the potential to become very lucrative.

Buying a house is, after all, a necessity for most people who simply need to put a roof over their heads, but it’s also a major investment that has the potential to make money.

A home is an asset, so buying a house or selling a home is, in fact, an investment that people transact in the marketplace. Whether or not you intend to live at the property or are purchasing it strictly for investment purposes, you’ll want to ensure that you are buying a home that is likely to make you money.

Improve Cash Flow

If you’re buying a property with an eye toward renting it, you can improve your year-round cash flow. Certainly, it costs money to maintain any property, but monthly rental payments should be able to provide property owners with income and help pay for those maintenance essentials. Even if you intend to live on the property, you might choose to rent out a portion of it or a room to earn income. Buying a house as a money-making investment is a tried-and-true way to improve cash flow for property owners.

Nest Egg Potential

When buying a home for investment, it’s important to consider appreciation. Many homes will appreciate in value over time, which is why you’ll hear many homeowners refer to their house as their ‘nest egg.’ Homes can also depreciate in value, especially if they are in undesirable locations (i.e. near landfills or in flood zones) or if they are not adequately maintained. When buying a house as an investment, it’s important to perform some cursory research. Have other homes in the vicinity increased in value? You want to make a safe investment, so be sure to carefully consider the property you buy.

Equity

By investing in a home and paying down its mortgage, you build up equity. You can tap this equity to make improvements before selling a home even to make another real estate deal. A property is a lucrative asset that adds to your investment portfolio and portfolio of wealth. You can build equity in your property more quickly by doubling up payments. By renting it or part of it, you can use the income to put back into the property.

Strategic Improvements

One of the great things about buying a house is that you can improve it to increase its value—and expect a decent return on your investment on top of it. Many home improvements can enhance home value. You can renovate the kitchen, finish the basement, add a garage or larger garage, add an extra full bath, or install new windows. These home improvements are all associated with property value increase.

Buying & Selling to an iBuyer

As the real estate industry has changed drastically over the last 10 years, one big surprise is the entrance of the iBuyer. These are companies that provide almost immediate cash offers to homeowners who may be looking to sell. The big difference between selling a home to an iBuyer and selling your home traditionally through a real estate agent is that you don’t have to put your home on the market and keep it show ready for when a potential buyer wants to come take a look. As some homeowners choose to remain traditional and list their home on the market to sell for maximum price, others choose to make a quicker, easy, and more convenient home sale through an ‘instant offer’ company.

Keep these ideas in mind as you contemplate making a real estate investment. Buying and selling real estate is a promising investment field, but it’s important to do your research to ensure that you’re making the right decisions for you.

Published: February 10, 2020
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Spencer Hesseltine

Spencer Hesseltine is an entrepreneur who works in the real estate technology and digital marketing space. He has worked for some top companies in the greater Phoenix area and writes for a number of online publications. Connect with him on LinkedIn or follow him on Quora.

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