Bill's Real Estate Blog - News to Use!

Investing in Real Estate

As with all investments, real estate investing has it own risks, and the decision to invest should be carefully considered. As a landlord there are certain costs that you will need to cover, potential vacancy problems that may strain your ability to pay your mortgages, and liability issues. It is important that you speak with an expert before putting yourself in a situation where you can potential over-extend yourself.

Single-family residence. First-time real estate investors are usually advised to buy a single family detached home and rent it out as it's market value appreciates. The reason for the popularity is that this approach is relatively easy. Single-family homes are easy to buy, easy to finance, and they hold appeal to buyers and renters.

Vacation property and second homes. Investment options in this category are diverse, from outright purchase to fractional-interest contracts and timeshares. Even if the property isn't income producing, it can appreciate into a worthy investment, and mortgage interest is fully deductible. It is often a good way to make owning the vacation property you wish to own more affordable.

Apartment properties. Apartment properties require a long-term commitment, as well as a substantial investment of borrowed and equity capital, but due to the availability of professional managers they often don't demand a lot of personal time. If you are the do-it yourself type then you might find yourself spending your weekends painting, advertising vacancies, and repairing faucets - though the higher return might be worth it for you.

Condominiums. Condominium investments provide a bit of extra risk. Their market value appreciates more slowly than for detached single-family residences, and rental rates usually aren't high enough to cover mortgage, property tax, and maintenance fees.

Commercial property. To reduce personal liability and offset the greater expense of these properties, some investors form or join a limited liability company. Because of the extremely high risks involved with this type of agreement, consulting a real estate attorney is essential before taking this step.