Investing in real estate
Investing in real estate is one of those things that can make or break your bank. Making any type of bad investment can devastate your bank account. But real estate has the ability to do even more to your bank account and your net worth overall.
Why Real Estate?
Just like with most investments, there are pros and cons. It can be extremely lucrative when done correctly. However, when done poorly, it can also be a bad investment. There are a few different ways of going about owning and investing in real estate. You can buy it and then flip it. You can but it and then rent it. Or you can buy it and list it on Air BNB as a vacation rental. All of these options can work very well, but only if applied in the right Market. For instance, you would not want to Air BNB a house in the middle of nowhere. You also may not want to sell a place that is in a high-value rent area either. It may be best to rent it out in order to make your investment worth your time.
Why Buy Real Estate?
Real Estate is a good investment. There is not much depreciation in land. In fact, the cost of land is only going up. Same with your home! The cost of buying is rapidly rising. However, it does depend on the location of the real estate.
What is Air BnB?
Air BnB is a website that links hosts to guests so that they can rent out your space, spare bedroom, your entire home, your apartment or other spaces you may have. Why is this a game-changer? Well, Air BnB is much like a hotel – In the sense that you can have different guests every night. This allows you to charge a nightly fee for your place every single night. Imagine this – you could rent your home out that you just purchased for a modest $125/night and let’s say you have a guest 4 times a week.
That’s $2.000 a month. If you’re in a touristy part of town, or even in a big city you could be full almost every night.
So let’s do some math. Say you own a 2 bedroom 2 bath home in downtown Dallas, at a cost of $300,000. Your mortgage would come out to roughly $2,000. So far you’re negative $2,000 a month + $250 a month for upkeep. You’re in the hole for a total of $2,250. An Air BnB in downtown Dallas is going for an average of $200 a night. If you can rent out the property reliably for 4 nights a week. That’s $800 a week, $3,200 a month. After the $2,250 monthly costs plus the additional costs of utilities, is it worth it to you?
Why Rent it Out?
Renting out your property is a great way to invest your money. The rent from the tenants can not only pay off your mortgage, cover any costs of maintenance but you can also have smaller amounts of income every month.
Why Flip it?
Flipping a house is another way of making money in the real estate business. There are different ways to flip real estate. You can buy the property, renovate it and then resell it. You can buy the property and then resell it. There is a risk on either side. The best way to mitigate risks is to leave a wedge of $100-$150k.