For the majority of investors, the question of how to maximize profits boils down to two key options: selling versus renting. This article will delve into how real estate investors are profiting from both and which may be the superior option for different investing styles and situations.
Selling as an Investment Strategy
An excellent way to profit from rental properties is to buy with a plan to sell. From the start, having the endgame for all of their investments in mind is what investors need. Selling as an investment strategy allows the focus to shift from buying properties to hold and rent to buying properties that you plan to sell within a shorter amount of time. “Flipping” a house means buying, renovating, and selling the property quickly. This is one of the more popular ways to prioritize selling as an investment strategy.
But flipping houses isn’t the only strategy investors utilize to profit from rental real estate. There are investors who will find bargain properties that could make great rental homes with a bit of updating. Suppose the value goes up, either due to improvements or market appreciation, or both. In that case, they turn around and sell the property as a rental home to other investors.
For those looking to add to their investment portfolios without all the work of getting a property ready to rent, occupied rental homes can usually be successfully sold as turn-key business opportunities. Naturally, this strategy is only effective if the purchase price is low enough or the market appreciates fast enough to cause the desired return.
Renting as an Investment Strategy
Another common investment strategy to gain income from real estate is to buy properties to hold and rent. In general, this style is viewed as a much more effective strategy for long-term wealth building. This strategy lets investors profit from rental houses by collecting rental income every month and collecting rental income when the property is sold. But the year-over-year gain might not look as big as the proceeds from a sale.
The proceeds from the sale of a long-term rental are more or less going to be higher since any debt against the property will have been paid down over time. But this depends on how long you hold the property and how well you prevent any severe economic downturns. If you have the time to hold property and favor stability over quick payoffs, buying to hold and rent is probably your best route.
Invest Like a Pro
Likely the biggest reason some investors don’t find the buy-and-hold strategy preferable is having to manage tenants. Traditionally, rental homes are managed by property owners, many of whom are not professional landlords and have little property maintenance skills. Yet as Fort Lauderdale professional property management companies have expanded and improved, many investors are looking to the experts to help them boost their profits. If the only reason you want to sell investment property is that you’re worn out from dealing with bad tenants, it may be time to hire a professional Fort Lauderdale property manager to do the job for you.
We want to help rental property owners like you build real wealth through real estate investing at Real Property Management United. To learn more about the services we offer, contact us online or call us at 973-747-5629.