Gaining financial independence through real estate investment might seem like a long uphill climb (and a risky one at that), but it’s very possible and not at all uncommon. Many people throughout Erie, PA have gained financial independence through various types of real estate investment, and it’s time you were on your way to becoming one of those people.
Here’s what you need to know about real estate investing in Erie, PA.
There are Many Types of Real Estate Investing
Rental Properties: The concept is simple: Buy a property and rent it out for more than your mortgage, taxes, and maintenance costs. Challenges include finding qualified tenants and paying for maintenance on the property, which could suffer higher wear-and-tear than with a permanent owner.
Many investors choose to work with a property management company to handle all the advertising, tenant screening, and property maintenance for them.
Real Estate Trading: Otherwise known as “flipping”, the concept here is to buy a property, hold it for a short period of time, and sell it for more. This can occur because the buyer has found a great deal on an undervalued property, the buyer has made improvements or repairs to the property, or market changes have lead to an increase in the value of the home.
These investments can be problematic if the buyer is unable to sell the home in a short period of time or too much money is spent on improvements.
Real Estate Investment Groups: Possibly the safest and least profitable form of real estate investing, real estate investment groups consist of a group of investors who together buy a property (such as apartment or office buildings) and hire a property management company to completely take control of all the aspects of maintaining and renting the property.
The upside is that a smaller initial investment means less risk overall. The downside—a percentage of the profits are lost to the property management company and remaining profits are split amongst investors.
How to Make Money with Real Estate Investing
Money is earned through investing in various ways:
Real Estate Appreciation: The value of the property increases when you sell it due to a change in the market.
Buying Undervalued Property: Knowing where to search to find properties being sold at less than their actual market value is crucial.
Loan Pay Down: If the rental cost is high enough, the tenant is essentially paying the mortgage off. Once the loan is paid off, all rental income becomes income.
Tax Benefits: Earn money through extra tax write-offs, no “self-employment” tax associated with traditional business ownership
Renovations and Improvements: Increase the value of the property by completing renovations.
How to Get Started with Property Investment
Learn how to find good deals. Work with an experienced investor or Realtor to learn how to find good deals on homes and properties. You’ll learn to keep an eye out for short sales, foreclosures, and REO properties. You realtor or investor can also help you negotiate better deals.
Buy in appreciating areas. Knowing the “hot” buyer areas can help your property values soar all on their own. And for rental properties, it will be much easier to find tenants in areas that are popular. Look for places with good job growth and community development, a predicted rise in real estate values, or lots of interested buyers.
Complete repairs and renovations. Can’t sell or rent your property? You may just need to make a few repairs to bump up interest. Work with a reputable, knowledgeable, and trustworthy local vendor to determine which repairs need to be made.
Thinking of Getting Into Real Estate Investing in Erie, PA?
Then it’s time to contact Marsha Marsh Real Estate. As your guides to all things real estate in Erie County, we’re here to help you find the right place to start buying, complete any renovations and repairs, or manage your rental property.