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With the volatility of the stock market and interest rates on savings accounts, CD's, and money markets at an all time low, investors are looking for ways to get better returns on their investments. One key investment that they are turning to is real estate. Legacy Mark Realty believes strongly in investing in real estate. Not only do we specialize in helping our clients find great investment properties but we are actually real estate investors ourselves!
There are different ways to invest in real estate and we will highlight two of them below.
BUY AND REHAB
Most commonly referred to as flipping, this is where an investor purchases a distressed property for lower than the market rate due to structural issues, cosmetic issues, lack of maintenance, etc. and invests money into rehabbing the property to bring it back up to par with other homes in the area. Once the rehab is complete, they immediately put the house back on the market for fair market price. The idea is that the purchase price of the distressed property plus the cost to rehab will be less than what the investor is able to sell it for at fair market value.
A distressed property is purchased for $100,000 in a neigborhood where a similar home in good condition is selling for $175,000. The investor makes a down payment of 25% ($25,000) to purchase the property and spends an additional $35,000 for rehab, utilities, and fees. Three months later when the rehab is complete, the investor lists and sells the property for $175,000.
$175k - $60k (down payment plus rehab costs) - $75k (remaining loan balance) = $40k in profit
Rental property investments are when an investor purchases a property that they intend to hold for an extended period of time and rent to a tenant. This in turn makes the investor a landlord. Unlike flipping, this type of investment is geared more towards a long term investment of your money rather than a quick turn. There are several financial advantages to rental properties and money can be made in several ways:
NOTE: The investment examples and descriptions used above are for illustration purposes only. Legacy Mark Realty does not state or infer any guarantee of a profit on an investment. All investors should also speak with competent finance and legal professionals to understand tax and legal implications.