flippinghousetips.com

Flipping house tips, ideas, and secrets that will make you big profits from your next

real estate project

Flipping Houses
Flipping House News
Flipping House Articles
Flipping House Finance

Flipping House News

Flipping Houses?

 

You could be facing financial disaster if you don't read this!

 

Renovating for Profit

 

Click Here for further information

 

 

 

Investment Property or Income Property?

 

Adam Smith

If you are a young professional aspiring to be wealthy and looking for extra income opportunities, then you have probably checked out the real estate market. Many are making a fortune through real estate by cashing in on their investment property. At this point in your career, you have two real options you should consider. You could buy an investment property and hope to cash in on the property in the future, or you could look for an income property that will offer profitable cash flow from month to month.
Let's take a look at the advantages and disadvantages of investment properties and income properties.


Income Property


The methodology behind investing in an income property is focused around making money now. Not everybody can invest money in real estate and hope for a huge return 15 or 20 years down the road. For investors that don't have a big stash of cash laying around waiting 15 or 20 years for a return on their investment is not a viable business plan.


Thus, as you might expect, an income property is a property that returns positive net income from month to month. For example, the typical income property for small real estate investors is a single family dwelling. Suppose a person much like yourself decides to invest in house that is being sold at or below market value. The business plan is to make minimal investments fixing up the house, and then rent out the house to somebody with sub par credit that can't get a loan for their own house. To initially pay for the house a mortgage loan is taken out. The monthly mortgage loan payments are calculated to be $850 and you plan on renting out the house for $1100 since there is a shortage of rental homes in the area. Right off the bat you have a gross operating margin of $250 on this income property. Of course there will always be other expenses, such as maintenance and taxes, which you must pay. However, these additional expenses will still leave a nice little cash flow of profits for your efforts. Bigger investors follow this methodology and buy an income property like an apartment building and will make larger profits thanks to economies of scale.


Investment Property


The methodology behind an investment property is a bit different. Rather than focusing on current profitability like an income property investor, an investment property investor focuses on the big picture. The investor will buy an investment property which allows him to at least break even or perhaps make a small profit from month to month. However, his primary interest is holding onto the property for the long term and selling the property when the market value has risen significantly. Over a span of 15 to 20 years, it is not unreasonable to expect investment properties in hot real estate markets to double or even triple. Thus, the typical>investment propert
investor has two resources. He has lots of money on hand as well as time to play the waiting game.


The investment property investor is not terribly interested in making money on his investment right now. That is not to say he is willing to lose money on the property from month to month, but he is willing to operate at much lower profit margins than your typical income property investor. The real objective of the investment property investor is to strike it rich down the road when he finally decides to the sell the investment property.


Both of these investment strategies serve as viable business plans. What suits you best will depend on your needs as well as your resources. If you have lots of money and time then an investment property could be way the go, but if you need to make money now an income property might be your best choice.


Adam Smith is an informational author for 10X Marketing.com To learn about making a positive cash flow from investing in Real Estate, visit SNCLoans.com





 

None

 

Additional Flipping Property Articles

 

Why pay the Estate Agent's Prices?
More Details about Estate Agents here.Firstly, Estate Agents make their money by taking a percentage of of the price every property sold through them. For example, a property that was sold for £100,000...
7 Simple Steps To Real Estate Investing
Whether you are BRAND NEW to real estate investing or an expert in the game, its critical that you understand these 7 Simple Steps to real estate investing. First things first… • Real Estate is NOT a...
Flipping Houses: Make $30,000 a Month Flipping Real Estate
Okay, you know the drill: purchase a house below the current market rate, make some repairs and improvements to it, and then turn around and sell [flip] the house to generate big profits. While the concept...
Flipping Houses
Some real estate investing "teachers" advise beginning investors to find many houses and to flip the houses quickly for outrageous profits. Perhaps you've seen the claims of real estate gurus telling you...
Sell Your Home For More With A Home Appraisal
If you are planning on selling your home, you should invest in a home appraisal. A home appraisal is not the same as a home inspection, but will give you a bit more clout when it comes to getting a good...

 

 

 

Copyright © 2006 flippinghousetips.com. All rights reserved