Pretty much everyone, at one time or another, has thought about real estate investing, especially single-family homes. And why not? They seem like the most straightforward investment. But you should know that there are other ways to build your business as a real estate investor. If you are thinking of investing in real estate, there are other options to choose from. Let’s look at 5 of those.
Invest in a mobile home park.
If you’re looking to invest in real estate but avoid the high maintenance that comes with being a landlord, an unconventional choice might be for you. Mobile home parks are a great place to start, especially if you can find an established one at a low cost. A mobile home park allows you to purchase land and rent spaces out to people who live in travel trailers. There are many benefits to investing in this type of property.
Mobile homes are affordable compared to traditional houses because they’re easier and less expensive to build. Plus, you can make them more energy efficient. Therefore, mobile homes have a broad appeal among people looking for something more permanent than renting but who don’t want the burden of maintenance that comes with buying something bigger and more traditional.
Mobile home parks have lower maintenance costs than your average apartment building or single-family house because they are typically only one type of structure. You don’t have to deal with landscaping or exterior paintwork. Mobile home communities also usually require fewer amenities, so these factors reduce the cost of upkeep for the property owner.
You’ll need to ensure the park doesn’t fall into disrepair, though, as this will hurt its value. It’s important to track expenses related to upkeep, so you can plan accordingly and avoid letting things slide. However, once everything is up and running, owning a mobile home park should provide you with a steady income stream over time, because most mobile home occupiers opt to stay put within their communities rather than moving around like renters often do.
Invest in a fixer-upper and resell it.
If you’re looking to make extra money without spending too much time, consider investing in a fixer-upper. A fixer-upper is a property that needs some work, whether cosmetic or structural. Fixer-uppers are cheaper than similar properties in better condition, and the savings you’ll get from snagging a deal means you can reinvest the profits into fixing up the property and increasing its value.
Investing in a fixer-upper is popular among beginner real estate investors because it requires little to no experience, and you can work on it on the side of your regular job or during retirement. Of course, you’ll need to be handy with tools and have some construction knowledge before tackling this type of business venture.
It’s also smart to set aside money for repairs upfront by saving from another source or applying for an unsecured personal loan. As always with real estate investing, there are risks involved. If you don’t have time or know-how to repair the property yourself, you’ll need a contractor, and that will cost money you could invest elsewhere. But once you’ve spent time and money improving the property and getting it ready for sale, there’s potential for big payoffs, if you don’t overspend on upgrades.
The next time you pull into a parking garage, look around and see how many parking spaces there are. Now multiply that by the number of cars that park in the garage every day, every week, month, and year. It could be hundreds or thousands of cars per day! Now think about how much it costs to park in those garages. It can be upwards of $40 a day in a large city.
One way to start is by buying an existing parking lot. You may not be able to afford a parking lot in a large city, but you might find a good deal on a parking lot in a smaller up-and-coming city. Parking lots can generate regular monthly income and usually need less maintenance than other types of real estate investments.
Invest in apartment buildings.
If you’re looking for a partially passive way to grow your wealth, consider investing in apartment buildings. Unlike single-family homes, which are often a good investment with little hands-on work needed (except for the occasional lawn mowing), apartment buildings require more of an initial capital outlay but can also generate higher returns.
It’s important to monitor vacancy rates on apartments to ensure there isn’t too much risk involved–just like you would with stock market investing. But if you do it correctly, this investment strategy has many advantages compared to other investments, such as stocks or even real estate sales:
Buy foreclosed properties cheaply, then resell them.
A foreclosed property is a piece of real estate seized from the owner by the bank when they fail to make payments on the mortgage loan. This means the bank becomes the new owner and is ready to sell it at an affordable price.
The biggest benefit is that foreclosed properties tend to be less expensive than other types of homes. For example, if you’re looking for a house with three bedrooms and two bathrooms in your area, a foreclosed property would likely cost less than similar houses on the market. So, you can theoretically buy a foreclosed home and sell it quickly for a profit.
Another advantage is that foreclosed homes are often empty and ready for immediate occupancy. There are no long chains of owners who must sell their homes before they can move in, no financing contingencies holding up transactions, and no inspections if you agree to purchase as-is.
The Bottom Line
There are many options for investing in real estate, including buying a single-family home or condo. The direct appeal of real estate is that it’s a relatively low-risk way to begin building wealth. There are certainly high-end penthouses and luxury condos that can go for millions of dollars, but real estate investing becomes more accessible when you consider the alternative: stocks. It’s possible to lose your investment in a stock, as there is no guarantee it will return the profits you were hoping for. It’s less likely you will lose all your investment in real estate.
Real estate also has a greater chance of paying off its initial loan, especially if you take steps to protect yourself from issues like foreclosure or unexpected property damage. There are many options for investments, besides the traditional single-family home or condo, so be sure to explore all your options before settling on any one deal.