For the majority of investors, the question of how to maximize profits boils down to two key options: selling versus renting. In this article, we’ll closely examine how real estate investors are profiting from both and which may be the better option for different investing styles and situations.
Selling as an Investment Strategy
A good way to profit from rental properties is to buy with a plan to sell. From the start, having an endgame plan for all of their investments is what investors should have in mind. Selling as an investment strategy may allow the focus to shift from buying properties to hold and rent to buying properties that you plan to sell within a shorter amount of time. “Flipping” a house means buying, renovating, and selling the property quickly. This is one of the more popular ways to prioritize selling as an investment strategy.
Flipping houses, however, isn’t the only strategy for investors to make use of profit from rental real estate. There are investors who will find bargain properties that could make great rental homes with a bit of updating. After that, once the value goes up, either due to improvements or market appreciation, or both, they turn around and sell the property as a rental home to other investors.
For those looking to add to their investment portfolios without all the work of getting a property ready to rent, occupied rental homes can usually be successfully sold as turn-key business opportunities. Of course, this strategy will only work if the purchase price is low enough or the market appreciates fast enough to cause the desired return.
Renting as an Investment Strategy
A second frequent investment strategy to profit from real estate is to buy properties to hold and rent. This approach is considered, in general, to be a much more effective strategy for long-term wealth building. This strategy allows investors to profit from rental houses via collecting rental income every month and then collecting rental income when the property will be sold. Although the year-over-year profit might not look as big as the proceeds from a sale.
The profit from the sale of a long-term rental is more or less going to be higher since any debt against the property will have been paid down over time. But this depends on how long you hold the property and how well you avoid any severe economic downturns. If you have the time to hold property and favor stability over quick payoffs, buying to hold and rent is probably your best route.
Invest Like a Pro
Perhaps the biggest reason some investors don’t find the buy-and-hold strategy preferable is having to deal with tenants. It has been long established that rental homes are managed by property owners, many of whom are not professional landlords and have little property maintenance skills. But as Cumming professional property management companies have expanded and improved, many investors are looking to the experts to help them develop their profits. If the only reason you want to sell investment property is that you’re exhausted from dealing with bad tenants, it may be time to hire a professional Cumming property manager to do the job for you.
At Real Property Management North Point, we make sure 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 404-341-2102.