Real estate is an excellent way to diversify your investment portfolio but which type of investment property is right for you? You must consider beyond commercial or residential real estate, to how your investment will help meet your goals and the type of commitment it requires.
Fix And Flips
Buying, fixing, and flipping a fixer-upper can garner big returns but there is a lot to consider. For starters, you will have a long wait time between purchase and profit. After you buy the home you will need to hire an architect and construction team. Once complete you will likely need to stage the home, including exterior paint and landscaping. Last but not least, you will need to maintain all housing costs until your home sells. These costs add up quickly and are often more than expected. When all is said and done, you must weigh if your profit was worth the time and investment. Flipping homes can be a lucrative path, but it’s a lot more work than reality TV.
One of the fastest-growing types of investment properties is vacation rentals, like Airbnb. The average NoVA condo or home can generate between $100 and $130 a night—more on the weekends and in the summer. From this price you must factor in the cost of fully furnishing the property, cleaning between guests, Airbnb fees, and property management fees if you don’t want to be the primary go-to for your guests. Vacation properties can generate more income than the local rent, but it will take time for your property to get steady bookings, and there is likely to be a distinct high and low season.
Traditional Rental Properties
You have many options to choose from with rental properties. First and foremost, you want to consider if you want commercial or residential real estate, then single or multi-unit. If you are looking at buildings, some may be mixed-use. For example, commercial rentals on the first floor and apartments on the upper levels. Your first considerations are if repairs need to be made before you rent it out, ensuring the rent covers your mortgage while leaving you enough money to set aside for repairs and maintenance and gaps between tenants. You must also decide if you want to take on the responsibility of becoming a landlord and learning fair-housing and landlord obligations or if you want to hire a property manager.
The great thing about land is that it is far cheaper to purchase. The most important thing to keep in mind when buying land is identifying what you want to do with it once purchased, and if it is properly zoned for what you want to do. You must also consider if it is properly set up in terms of nearby power and cable lines and if you will need to set up water and sewage. Your land options, if properly zoned, might include land for farming and agriculture, building new real estate, a solar or wind farm, creating a parking lot for RVs, boats, machines, or cars, renting it out for community events, and more.
These are your most common real estate investment options. If you are looking to invest in NoVA real estate we invite you to reach out to the team at Jerry Sardone Realty. We’ve served our community for over 50 years and can guide you in your real estate decisions.