First you want to understand there are 3 types of residential investment properties:
1. renting out “being a landlord”
2. purchase and resell “flipping a home”
3. purchase and resell in the future “speculating a market”
All three investments offer great reward but all three do offer risks. You need to first look at what type of time, profit and risk you are willing to endure.
First, look at a purchase and renting out. This type of investment offers the least amount of risk yet your profits are made long term; you do inherit the liability of tenants.
Second, purchase and resell offers a higher level of risk. You need to have construction knowledge and the funds to support the monthly payments along with paying for the construction costs. The upside is you can make a handsome profit in a short period of time.
Third, purchase and resell in the future without doing anything to it. This is called speculating a market. This offers the highest level of risk because you have no control over the market conditions. An example would be I’m going to purchase a lot of land and sell it in a year for a profit when all the bigger, more expensive homes are built up. The risk is other homes don’t sell for what you speculated. The upside is you don’t do anything to your investment but just make your monthly payments.
Once you have chosen what type of investment you want to be part of, you do your homework and research the investment. What type of homework and research do you do?
Stay tuned to next week’s blog. Any questions please feel free to give me a call 781-985-9064 or e-mail me: John@JohnConnolly.com.