If you’re looking for your next investment opportunity, the real estate market has a lot to offer.
When you invest in property, you have a strong chance of making a great return on your investment and, the best part is, you don’t necessarily need to have hundreds of thousands of dollars at your disposal to get started. Here are five excellent options to consider if you are interested in investing in real estate.
1. Buy a Rental Property
Buying a property and renting it out to tenants on a long-term basis is a great way to build wealth and generate a steady stream of passive income at the same time. However, this option will require some work on your end and extra costs can come up while you own the property.
Owning a rental property means you’ll have to find the right tenants for the property, manage their lease, and manage any issues that come up during their rental term. For example, if something breaks it’s up to you to get it repaired in a timely manner.
You’ll also need a reserve fund for unexpected costs like repairs or vacancies.
2. Buy a Vacation Rental Property
Investing in a vacation property and renting it out to tenants on a short-term basis has similar benefits to buying a long-term rental property. In fact, you may actually end up making more on this kind of investment than you would on a long-term rental.
The catch is, managing short-term rentals is a lot more work than managing long-term rentals. If you decide to go this route, you would likely want to consider hiring a property management company to manage the rental process on your behalf. This will definitely save you a significant amount of work, but it’s an extra cost. You can expect a property management company to charge 10-25% to manage a short-term vacation rental.
3. Rent Out a Room or Suite in Your Home
Companies like Airbnb have made renting out a room in your home—or renting out your entire home—on a short-term basis a really popular way for homeowners to create some extra income.
If you have a legal basement suite in your home (or are willing to invest in the renovations required to create one), renting out some space in your home may be an excellent long-term option for you. Or, if you are considering moving or buying a new home in the Edmonton Real Estate market, look for any homes for sale now that have legal basement suites.
Similar to buying a long-term rental property, you will have to find a tenant who is a good fit for space, manage their lease and handle any issues that come up during their tenancy.
4. Flip a House
This option is probably the most work-intensive of all, but it can have a strong payoff more quickly than some of the other real estate investment options available. Flipping a home, which involves buying a house, fixing it up and reselling it for a profit, can be an incredible investment if it’s done well.
Flipping a house can be a full-time job, so it’s not a good passive income strategy. It also involves a lot of costs upfront, from buying the home in the first place to the materials and labour for the renovations. This strategy can be quite risky as well, especially if the property doesn’t sell as quickly (or for as much money) as you estimated at the beginning of the project.
This type of investment definitely requires a lot of due diligence before jumping in! You’ll need to look into everything from acquisition costs to holding costs to the cost of the renovations and repairs. It is also a better idea if you are handy yourself as you can save a lot of money in contractor or renovation costs.
5. Invest in a real estate investment group project
If you don’t want to take on an entire property or manage the rental process, you could consider investing in a group real estate investment project as a lender. Now, this doesn’t necessarily mean directly lending money to someone you don’t know. You could help finance a real estate project through a relationship with a reputable mortgage broker or through an online lending platform or business.
Real estate crowd funding is growing in popularity. This kind of crowd funding connects individual investors with professionally managed real estate deals. A third-party crowd funding company vets potential real estate partners, making sure they’re well-established with a track record of success. Then they offer individual investors opportunities to help fund real estate projects these vetted companies are managing. They assess these projects for their potential growth and return before bringing them to investors through their platform.
This is a far more complicated form of real estate investment and is not for the faint-hearted. Doing your due diligence as well as making sure you find partners you can trust is essential
If you are considering real estate investment opportunities in Edmonton, contact Jeneen Marchant today! She understands Edmonton’s real estate market and will use that knowledge to help you find the best investment for you.
Hi, I’m Jeneen Marchant!
I’m here to help you find you during your next Real Estate transaction. Home ownership is a beautiful thing and I love seeing my buyers happily opening the door to their new home on possession day. I also get great satisfaction from helping my sellers get the best price possible for their home when it is time to move on to another property.