Residential Investment Properties

Home buying – an undeniable part of the DNA of the fabric of our country and truly synonymous with the American dream. When purchasing real estate, most people are motivated by creating a home that is their own, a house to fill with memories over the years to come, a validation that they have achieved success by one of the key metrics of this country – home ownership. But residential home buying, for many, goes beyond just creating a place to call home for their family and loved ones to enjoy for years to come – it can be the key to financial freedom.

More and more often, residential home buying is being leveraged to create an avenue for the average American to achieve their financial goals – by purchasing homes they never plan on living in. With the potential for higher returns compared to other investment tools, investing in real estate can pave the road to financial independence – and for those both smart and lucky enough, can be one of the most accelerated ways to become a millionaire. However, for many who go down this road without understanding the complexities of this market, or the time required to generate a lucrative revenue stream, it can be filled with disappointment and financial loss.

A new analysis from CoreLogic shows that the house flipping trend continues to gain momentum. The rate of house flipping (defined has houses sold within two years of initial purchase date) is on an upward trend, showing year-over-year growth for the past 12 consecutive quarters. While many residential investors have claimed their piece of this profit, others have not been quite as successful. So what is the difference between success and failure in residential real estate investing? It’s all about picking having a strategy, identifying your goals and leveraging the expertise to make it happen.

You Don’t Have to Flip to Cash Out

The “buy low, sell high” business model associated with house flipping isn’t the only angle into the residential real estate market. Another great point of entry is through buying a rental property purchased for the exclusive purpose of generating a profit. The premise is easy to understand – collect a monthly rent higher than the monthly costs associated with owning the home (mortgage, insurance, HOAs, lawncare, etc.). This approach to investing is attractive to many for its straightforward model and “passive” monthly financial gains. However, it can be deceivingly deemed a simple and easy way to make money. Calculating the ROI of a rental property can be extremely complex if you aren’t a seasoned expert in the rental world, and many investors grossly underestimate the investment of time they will need to make in order to purchase and prep the property for rental. The work doesn’t end when you get your tenant – as property management can also be timely and expensive.

Leaning into the Experts Can Make All the Difference

Knowing the market is crucial to identifying your investment property, and market level experts continually prove how beneficial local market knowledge is. “We see new investors who’ve learned about real estate in general but haven’t taken enough time to thoroughly understand their local market,” says Brzowski.

Many new and experienced investors have discovered that turnkey properties can help them mitigate many of these challenges and position them for better success in the real estate investment markets. Investors can benefit from turnkey investment companies’ expertise to vet and identify cash-flowing rental properties. Many understand how to leverage the BRRRR (Buy, Renovate, Rent, Refinance, Repeat) model of real estate investing, and can also offer more comprehensive services, including property management

Like anything in life, if are committed to mastering this industry, it may not be easy at the beginning – making small moves, understanding the market landscape, and surrounding yourself with experts in the trade as you learn are just as important as purchasing that first residential investment property. When done with required diligence, real estate investing is one of the many ways to grow your financial portfolio.

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