How to Invest in Real Estate Without House Flipping
House flipping may not be working anymore in many markets -- after all, it depends on really rapid price increases, and many markets in the US are cooling -- but investing in real estate is still a good deal. And how do you get the good deal? You follow the same good advice that the best investors use in the stock market: Buy quality and hold it!
Now, while not as "sexy" a strategy as buy low and sell high quick, buying a good investment property and finding the right tenants can do a lot for your long term financial health. Here's a number of benefits that this kind of investing can do for you:
1. "Positive Cash Flow": As long as your property can be rented for more than it costs you, it's making you money right away! It may not be thousands, but it is still extra dollars in your pocket.
2. You Build Equity. After all, it doesn't have to be just your own home that is building you value over time. As long as the mortgage on your rental property is being paid off, you are building an asset that is growing in value.
3. Tax Breaks! If you are willing to take the gamble and buy a rental property, Uncle Sam rewards you on your tax bill. There are tax deductions, tax credits and other government-sponsored programs that can also add up to more benefits to you.
4. Just Remember: Good Asset Management. If you are buying to hold, be sure to make repairs before they are a serious problem. For instance, paint that siding before the wood is exposed; you'll avoid significant damage to the wood that could result in having to replace it prematurely.
5. Rent Increases! Yes, inflation can be your friend in owing a rental property. You can usually increase the rent yearly, and thus be making more on your property, while your mortgage costs stay the same.
More on the benefits of of buying and holding in my next entry.