Investing in real estate is a major decision requiring knowledge of the industry and dedication to continual property management. However, the returns on investment are worth the endeavor. Now is the perfect time to invest in Seattle real estate, as the combination of low home prices and low interest rates means money in your pocket. Here are Six types of income-generating real estate investments that you may consider when planning your next purchase.
This type of investment involves purchasing a home that is in fair to poor shape and renovating the property for resale. Common fixers include short sales, foreclosures, and HUD owned homes. Investing in a fixer can yield instant equity for a smart home buyer because you can often sell for a substantially higher price than the costs involved, providing quick profit. When considering renovating, research the area to determine what types of homes people in the area are looking for.
Single Family Homes and Condominium Rentals
Investing in a rental property can be a great way for an investor to get started in real estate. Single family homes provide a monthly supplement to your current income. Most often the tenant will pay all utilities so you as a property owner only have to worry about collecting rent to pay off the costs of your investment. With a condo, the landlord generally doesn’t have to worry about property maintenance as most buildings will have professional management to handle any physical issues.
Vacation Home as an Income Generator
A vacation home is a property used as a short time rental while you personally are not using the home. An example would be a beachfront cottage or a ski cabin that you only use during specific times of the year. The plus side of this investment is that you are generating income that you otherwise would miss out on, but the downside is that you must be smart with this purchase so that there are prospective tenants that are willing to rent out the property during all 12 months.
Multi-family residences are similar to single family rentals, but with multiple rental units. Common multi-family properties include duplexes, triplexes, fourplexes, and apartment complexes. These properties can be either owner occupied (where the owner lives onsite) or all units occupied by tenants. The success of a multi-family home is dependent on the landlord being able to fill the maximum number of units with minimal vacancies between renters.
Mixed use buildings are often commercial properties on the main floor with apartments above. This type of investment is enticing to both types of renters because the commercial tenant will have a supply of customers living above their business, and residential tenants will have the ease of close amenities. Investing in mixed use real estate can be a fantastic way to conquer fluctuations in the economy because if the commercial market is weak, the residential market could still be strong and vice versa.
Office and Retail
This type of property can include one tenant (a company) or multiple units for multiple tenants (companies). Examples include a single retail building such as for Wal-Mart, or a variety of offices such as a strip mall. A great advantage of office and retail income properties is that the tenants are normally long term, providing assurance for the landlord that vacancies will be less frequent.
Investment properties can be a relatively simple way to make massive returns on investment. Remember, however, to research the area and the market to make sure the investment you choose is a profitable one.
A great resource to assist you with your Seattle Investment process is through Team Troy and our Vice President of Investments, Angela Coria. She is an expert on Greater Seattle Investment Properties and Property Management. Find out more HERE.