There are two ways to generate income from real estate investment: passive and active. Buying and holding an investment property generates passive income. Flipping contracts, doing renovations, and organizing property deals all generate active income. The key to real estate investing is positive cash flow, meaning you earn more than you spend on expenses. Positive cash flow applies to long-term rental properties and short-term vacation home rentals.
You don’t need much capital to get started as a real estate investor. There are several ways to invest in real estate without money. You can take advantage of seller financing through lease options, assuming someone else’s mortgage payments, borrowing a conventional loan or taking out a hard money loan, or utilizing a home equity line of credit against your primary residence.
Your real estate investment strategy determines whether you earn passive income or active income, and below are some steps to help you with this process.
Secure an investment property.
Chances are you won’t be making a cash offer on an investment property. Before you look into investment property financing, you’ll need to take a good look at your finances to ensure you can afford any surprise expenses that come along with a real estate investment. The interest rate you qualify for on a conventional mortgage is affected by your credit score.
There are several types of investment property loans you can explore, including FHA loans, home equity loans (or HELOC), and a mortgage from a conventional lender. The type of loan you qualify for as a property owner depends on your credit report, your ability to make a down payment, the life of the loan, your income ratio, and your ability to make a monthly payment.
Savings can help you find a loan for investment property by comparing mortgage rates from leading lenders. From rental property loans with lower interest rates to single-family home loans with higher interest rates, there is an investment property financing option for every hopeful homeowner.
Pay attention to area real estate trends.
You’ll need to pay attention to your area’s real estate trends to get the best return on investment. Making real estate investments during economic downtimes is a good idea in order to secure favorable purchase prices. Lower-income neighborhoods could be profitable options if your strategy is to invest in fixer-uppers. Take a look at the property values and sale prices in the surrounding areas to estimate your potential ROI.
Once there’s an uptick in neighborhood sale prices, you can list your investment property on the real estate market. Rather than leaving your property empty while you wait for the right time to sell, consider earning rental income by taking on tenants. If you don’t mind the responsibilities of being a landlord, generating rental income will help you cover the costs of maintaining your property until it sells.
Look at non-traditional selling options.
Going through the whole process of finding a real estate agent to sell your home, making necessary repairs, preparing for open houses, and vetting potential buyers can give you a headache. Sometimes a seller needs to make a quick sale on their current home to avoid foreclosure, liens, bankruptcy, or costly repairs, or they need a lump sum from a burdensome rental property to buy a new home.
Sell Quick California is a group of real estate investors who buy homes, as they are, from homeowners in Los Angeles County and the surrounding areas who don’t have a long time to wait for a buyer. The homebuyers take away the hassle of traditional selling by offering homeowners fair, no-obligation cash offers without traditional bank financing.
With We Buy Houses Los Angeles, there are no agent commissions, no closing costs, no escrow fees, and no paperwork – just hassle-free sales based on your timeframe. Simply provide detailed information about your residential property and receive a fair cash offer. There are real estate solutions for every homeowner in Southern California, no matter the timeframe. If you have a house in Los Angeles, Pasadena, Torrance, or Long Beach, see if a no-hassle offer from Sell Quick California is right for you.
Buying and selling real estate is about strategy and timing. Whether you plan to earn passive or active income, a bit of research can mean more money in the long run.