For the majority of investors, the point of how to maximize profits boils down to two main options: selling versus renting. In this piece, we’ll get to know better how real estate investors are profiting from both and which may be the best option for different investing styles and situations.
Selling as an Investment Strategy
Classified among the top ways to profit from rental properties is to buy with a plan to sell. Investors should always have the endgame in mind for all of their investments first and foremost. The selling as an investment strategy shifts the focus from buying properties to hold and rent to buying properties that you plan to sell within the least amount of time. Among the more widespread methods to prioritize selling as an investment strategy is through “flipping” a house, which means buying, renovating, and selling the property quickly.
However, flipping houses isn’t the only strategy investors use to profit from rental real estate. Lots of investors will go in search of bargain properties that, with quite a bit of updating, could develop into splendid rental homes. Following that, by the time the value goes up, either considering improvements or market appreciation, or both, they turn around and sell the property as a rental home to other investors.
Occupied rental homes can oftentimes be fruitfully sold as turn-key business opportunities to those looking to add to their investment portfolios without all the prior effort of keeping a property ready to rent. Needless to say, this strategy definitely works if the purchase price is low enough or the market appreciates fast enough to result in the desired return.
Renting as an Investment Strategy
Another widely known investment strategy to profit from real estate is to buy properties to hold and rent. This way is commonly deemed to be a much more effective strategy for long-term wealth building. Even if the year-over-year profits might not look as big as the proceeds from a sale, this strategy enables investors to profit from rental houses in two techniques: collecting rental income every month and then again when the property is eventually sold.
Subject to how long you hold the property (and excluding any real economic downturns), the proceeds from the sale of a long-term rental are likely to be much higher since any debt against the property will have been paid down over time. If you certainly have time to hold property and prefer stability over quick payoffs, buying to hold and rent is probably your best option.
Invest Like a Pro
In all likelihood, the main rationale why several investors don’t find the buy-and-hold strategy inviting is dealing with tenants. Basically, rental homes have been managed by property owners, the majority of whom are not professional landlords and have insufficient property maintenance skills. Although Pearland’s professional property management companies have expanded and definitely greatly improved, more and more investors are turning to experts to help them maximize their profits. If the only solid explanation why you are looking to sell investment property is that you’re tired of servicing bad tenants, it’s the best time to hire a professional Pearland property manager to supervise and manage it for you.
At Real Property Management Prestige, we effectively help 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 281-984-7463.