For many investors, the concern of how to maximize profits boils down to two main options: selling versus renting. In today’s article, we’ll get a closer look at how real estate investors are profiting from both and which may be a great option for different investing styles and situations.
Selling as an Investment Strategy
Contained in the top ways to profit from rental properties is to buy with a plan to sell. Investors have to have the endgame in mind for all of their investments beforehand. The selling as an investment strategy shifts the focus from buying properties to hold and rent to buying properties that you plan to sell within a minimal amount of time. Part of the more accepted means to prioritize selling as an investment strategy is through “flipping” a house, which means buying, renovating, and selling the property quickly.
But really, flipping houses isn’t the only strategy investors use to profit from rental real estate. A lot of investors will watch out for bargain properties that, with some updating, could lead to superb rental homes. After that, whenever the value goes up, either owing to improvements or market appreciation, or both, they easily turn around and sell the property as a rental home to other investors.
Occupied rental homes can oftentimes be effectively sold as turn-key business opportunities to those looking to add to their investment portfolios without all the undertaking and effort of getting a property ready to rent. Certainly, this strategy is only effective if the purchase price is low enough or the market appreciates fast enough to result in the desired return.
Renting as an Investment Strategy
Another prevalent investment strategy to profit from real estate is to buy properties to hold and rent. This strategy is usually acknowledged to be a much more effective strategy for long-term wealth building. Although the year-over-year profits might not look as big as the proceeds from a sale, this strategy makes investors profit from rental houses in two methods: collecting rental income every month and then again when the property is eventually sold.
Conditional on how long you hold the property (and not including any terrible economic downturns), the proceeds from the sale of a long-term rental are likely to be much higher since any debt against the property will have been paid down over time. If you have time to hold property and prefer stability over quick payoffs, buying to hold and rent is probably your best option.
Invest Like a Pro
Probably the utmost reason why various investors don’t find the buy-and-hold strategy exciting is dealing with tenants. Typically, rental homes have been managed by property owners, many of whom are not professional landlords and have inadequate property maintenance skills. Though, as San Clemente’s professional property management companies have expanded and hugely improved, a lot more investors are turning to the experts to assist them to maximize their profits. If the only legitimate reason you want to sell investment property is that you’re tired of catering to bad tenants, it would be the ideal time to hire a professional San Clemente property manager to operate it for you.
At Real Property Management Agile, we can definitely help rental property owners like you build real wealth through real estate investing. To learn more about the services we offer, contact us online or call us at 949-503-5300.