If you’re already a homeowner, you know that real estate can be a great investment in the long run. If you’re thinking about purchasing a second property, the following are some potential ideas for purchases that are focused on making a profit:
If you find a house for sale that is lower than other homes in the same neighborhood, you can potentially “flip” it for a profit. This can occur with foreclosures or short sale homes. It’s also common amongst fixer-upper homes, especially ones that need a significant amount of work. For property flipping you want to consider not only the price but also the investment to make improvements, along with the interest rate on the mortgage. Sometimes making cosmetic changes to a house, such as painting and landscaping can increase the value.
Property flipping can be profitable, especially in high-demand areas. If you don’t plan on flipping the home right away, you can generally rent it out until property values in your neighborhood increase and it makes sense to sell.
Right now, interest rates are at near record lows, which lowers the cost of borrowing. However, property values are at near record highs in many areas, so you will want to do your research to insure you can buy the property at a below market price.
Another way to invest in real estate is to purchase a vacation home, assuming you buy it in an area that has strong tourism traffic. If it’s in a seasonal location, you could potentially live in the house during the off-season, and then rent it out during the peak season. Depending on the area, you may even be able to rent it out to vacationers year-round. Some vacation homes are rented out by the season, monthly, weekly, or even nightly. As the owner, you can set the minimum stay and decide how you rent it out. You can market it yourself on sites like Faceboook, enlist the help of a realtor, or you can use a popular listing website like Airbnb.
Long-term rental leases
If you want to rent out your second property, but would prefer something more stable and long-term, you could always opt for a traditional lease. This ensures that you almost always receive a monthly payment from a tenant, and although you may not be able to make as much as you could with a vacation home, the flow of payments will usually be steadier unless you’re in between tenants. If you’re new to investing in real estate, this could be a place to start and can be done almost anywhere.
Apply for a mortgage with Filo Mortgage
Are you interested in learning more about obtaining a mortgage for an investment property? If you’re not sure where to start, remember that any property purchase is essentially an investment. If you don’t own your home yet, start by taking the next step toward obtaining your first-time homebuyer mortgage. If you are looking to explore your options for obtaining a mortgage for an investment purchase, we’re ready to help. Contact us today!