Image by naobim from Pixabay
• Disadvantages : You can ’ t always predict what a market is going to do . If market depreciates , you have lost money . Also higher tax rates in selling quickly .
4 . Vacant Land . Many options , including just holding while appreciating . You can also split it and sell it .
• Advantages : History has shown that land always appreciates in value . ( It ’ s the buildings on the land that go down . It is simpler than most real estate investments , with the possibility of great profits .)
• Disadvantages : It can take a long time to increase in value . You have expenses , but no cash flow while you wait unless you sell the contract before closing .
5 . Commercial Real Estate . These are any building containing 5 units or over and / or buildings sited for commercial use .
• Advantages : Long term triplenet leases mean little
management and high returns . Lending is usually based on the value of the property vs . personal credit .
• Disadvantages : Commercial property valuation requires a more complex method , taking into account the income potential of the property . This is recommended for the more experienced investors as there is a lot more involved to set up and maintain .
6 . Buy Property with Forced Appreciation . Buy in the path of growth and holding until values rise . For instance buying a lot in a residential development prior to roads being completed .
• Advantages : Can yield large profits , especially if you buy low to start .
• Disadvantages : Future price is not predictable – the market can turn , the developer can go out of business . You have expenses with no income while you ’ re waiting .
8 . PreForeclosure Investment Property : These types of investment properties are the ones which you buy from sellers who are behind in their payments and may lose their property to the bank via foreclosure .
• Advantages : You have opportunities to buy properties at below value pricing – “ Instant equity ”.
• Disadvantages : Legal liabilities are higher . Finding these properties requires a lot research and footwork to find a deal that works . You can do all the work and still not have a deal with enough equity to profit after expenses to sell , ( taxes , REALTOR ®, etc .).
9 . Assignments : This strategy has you control a property at a discount , preferably with a known buyer in place before you commit to your purchase . After you are in contract to purchase a property , you would sell your contract for a fee to someone else . For example , you get into a purchase contract to buy a $ 120K property for $ 100K . You turn it to an investor for $ 110K and profit $ 10K cash without the cost and hassles of ever closing on the deal .
• Advantages : This is a great way to make quick cash with low or no upfront investment , low risk and fewer headaches from closing and ownership . This strategy creates a winwinwin outcome for everyone involved .
• Disadvantages : This will only work if the property you are buying has equity so that you may buy it a discount . In declining markets , this type of property is harder to find . Also , when dealing with banks on REOs or Short Sales , you will find they will not allow you assign your contract . However , there are ways to get around this if you plan and handle the contract correctly up front .
DISADVANTAGES ADVANTAGES
7 . Preconstruction Investment Property : These types of investment properties are acquired directly from a developer before the construction or renovation is completed .
• Advantages : Low money out of pocket to tie up property while being built . If purchased in appreciating markets , you make money in equity at closing and can instantly resell at a profit .
Image by Michael und Maartje from Pixabay
60