As the market continues to be volatile, you want to know you are choosing the right investment option for your wallet and future. Real estate investments are more than deciding whether to invest in residential, commercial, or industrial property. Within each category are categories of their own. The type of real estate investment can make a world of difference in your budget, the energy put into the investment, and what your future wealth will look like. We will focus on residential investments and determine which five you should focus on in 2023.
1. Single-Family Homes
Single-family homes are the most attractive option for many investors as they offer a stable and steady income while offering a pragmatic approach to real estate investment. They can be easy to understand and handle for many investors as they provide a long-term investment option and, after the initial investment, can be managed on the side. Single-family homes can attract many renters as the market continues to grow. They can generate an impressive ROI as homeownership decreases, and many families are looking for rentals instead. Depending on the management style you want to take on, you can be incredibly hands-on, or you can choose to have a property manager as a middleman. It is a flexible option in order to get a steady passive income.
2. Multifamily Units
Multifamily units can be a great option for those who want to diversify their portfolio and have the time and budget to handle multiple units simultaneously. This includes apartment buildings, condominiums, duplexes/triplexes, and townhouses. Compared to a single-family home, multifamily units open the doors to short-term and long-term leases, allowing for a more flexible income since you can attract many tenants. Units can also be individually updated and renovated with amenities to bring in a higher monthly income. Before you invest, remember that anything above five units is considered commercial real estate and may cross into different tax brackets.
3. Raw Land
Raw land is open to any and all opportunities. It is perfect for those investors who want control over the development of their assets. You can choose to hold the land to sell when profits are highest, subsidize it to other investors, or develop a residential or commercial property on it yourself. With these many options, raw land can be a gold mine of cash flow once you know what to do with it.
4. House Flipping
House flipping can entice those with a lower budget, who want control over the development, and who like to play the high-risk, high-reward game. You can invest in a rundown property that needs some TLC, either by yourself or with the help of a loan. You are then in charge of that TLC, renovating it to be up to code and sellable. This can be a very labor-intensive and costly investment option, but it can bring amazing and quick profits once it is finished. It is growing in popularity, and with many people seeking rentals and property in 2023, creating properties to rent out and sell can be profitable.
5. Vacation Rentals
Vacation properties can provide those short-term rental benefits that other properties can not. Since you only rent out for a few days or a few weeks, there are no long-term lease agreements. While this can be riskier, as you could have rent gaps or less cash flow stability, it does provide its slew of benefits. Vacation rentals allow you to adjust rent prices quickly with the market flow, so you don’t have to wait for year leases to be up. There is also a higher gross income potential, and you can get a little vacation hideaway out of it when it’s not in use. Platforms such as Airbnb have skyrocketed in popularity, and the gateway market is rising in profitability.
Make 2023 your year for a profitable real estate investment! If you have questions or want to start on your journey and want to talk about loans, contact the team at KC Investor Funding.