Over a beer and cider, we had the best conversation about the different ways to invest in this market. There are so many options, it’s hard to know where to begin. With real estate appreciating at record-high levels across the country, you might be thinking of getting in on the property investment bandwagon. There are a lot of ways to invest and it is important to tune into your investment style to determine the best investment for you.
Below are four general investment options along with an overview, the pros, and the cons.
|Single Family Residence (house)||There is potential for both cash flow as well as long-term appreciation. Need to make sure long-term rentals are allowed in the area you are buying in (check zoning, HOA, CC&Rs). You can either self-manage or hire a property-management company.||In general, these appreciate faster than condos or townhomes.||Maintaining the whole house, inside and outside as well as the property. Higher insurance and property tax costs also need to be considered.|
|Condo||There is potential for both cash flow as well as long-term appreciation. Lenders may have stricter requirements for a condo purchase. The condo building may have a rental cap meaning you may not be able to rent it out. You can either self-manage or hire a property-management company.||Not as much maintenance required. Usually outside is maintained. May be more secure than a stand-alone home.||Condo dues can be high and usually go up over time. Rules around renting out the unit can change over time. Special assessments can be costly.|
|Vacation Rental||There is potential for both cash flow as well as long-term appreciation. These might be homes or condos and are also known as short-term rentals. You can either self-manage or hire a property-management company.||If you buy in an area you like to vacation, this could become a vacation home for you as well.||If you do not live close-by, a property manager may be something you need to look into. Depending on how you are set-up tax wise, you may only use your property 14 days or less per year.|
|Land||There is potential for long-term appreciation. With land becoming more difficult to find, it provides an excellent opportunity if you buy in the right area and focus on land that can be developed.||Little or no maintenance usually required.||If left undeveloped, rules around how the property can be developed may change over time.|
And there are even more ways to invest including tax liens, auctions, and even storage facilities! You can evaluate the investment for short- or long-term gains, regular cash flow, and even projected appreciation. Some people invest strictly with their spouse while others are comfortable investing with a group or syndications. The key is to stay within your comfort zone, plan for the “what if”, and think about not only your now needs, but your future needs as well.
When you are ready to learn more, we would be happy to help as there are so many more details than those outlined here. We can talk you through the different options available, provide you with lenders who are equipped to handle the type of investment and financing you need. Are you ready to talk investments? Reach out!