You can view your home as an investment if you own it. You invest money in it in the hopes of
recovering it upon sale. However, there are alternative real estate investment strategies that
might earn you a healthy return. Finding the method that works best for you and your budget is
all that is required.


Begin with a starter residence. First-time and lower-income homebuyers have fantastic potential
to become wealthy by investing in a property and residing in it for an extended period of time to
accumulate equity. There are several government benefits that will make it simpler for you to
accumulate wealth if your house doubles as your homestead, including less down payment
requirements for mortgage loans, cheaper interest rates, and lower property taxes. Since lenders
see non-homestead properties, such as second houses, as being riskier, they have tougher
requirements for down payments, income-to-debt ratios, and the kinds of loans you may get.
Create equity. Equity is the portion of the house that you actually own as opposed to how much
the bank owns. Four strategies exist for increasing equity:

1. A deposit. When you make a down payment, your equity increases right away. Your equity
ownership is 20 percent if you put down 20 percent. Your interest rate will be lower on your loan
the more money you put down.

2. Cost of the goods. By purchasing your house below market value, you may increase your equity
right now. Unless there is an issue, such as bad condition, a lack of upgrades, a short sale, or a
foreclosure, homes seldom sell for below market value. Make sure the cost of the home plus
upgrades maintains your home competitive among similar homes because you will need to invest
in updates and repairs to bring your home up to community standards.

3. Principal reduction. Little of your mortgage payment goes toward lowering the debt, while the
majority of it is used to pay interest. You'll grow equity more slowly the longer the loan's term is.
Your mortgage will, however, seem less intimidating as your income rises and housing expenses
rise. Put as much additional money as you can toward reducing your principal.

4. Time. Because historically house values have outperformed inflation by one to two percentage
points, your property will gain equity without you having to do any further action. Your objective
should be to accumulate enough equity in your property within five to seven years so that you
may rent it out and turn a profit.
Purchase, hold, and lease. The Great Recession demonstrated that real estate se ldom experiences
value declines and, when it does, does it quickly. Your objective should be to pay off your
mortgage and become the sole owner of the property. The debt on the house you currently own
won't deter you from buying another one as much as you would imagine, especially if you already
have a lease on it. The lender will determine if your planned rent is sufficient to cover the weeks
or months that the property may be vacant in order to determine if you are eligible to purchase a
second home. It's possible that there may be a lag between renters, and you'll also need some time
to clean, paint, fix things, etc.

If you can lease your property for more than you're paying in mortgage, taxes, and insurance,
that is the best situation. Additionally, you'll need money to pay the mortgage while the house is
vacant as well as potential future repairs.
Speak with Juan Mestre of the Berkshire Hathaway HomeServices network to see if renting is a
smart decision. He will have comparables for other rentals in the region, enabling you to gauge
the market's viability for properties similar to yours and the likely price at which you can sell it.
Become a reputable landlord. You'll be doing the duties of a property management professional,
which entails checking applicants' credit histories, rental and eviction histories, criminal and sex
offender histories, driving records, and employment information. For around the price of one
month's rent, you may engage a property manager to discover and qualify a tenant. Online
businesses that specialize in doing background checks on landlords are available if you decide to
rent out your house yourself.

In addition to clearly stating the duration of the lease, the move-in date, the terms for an
extension, late payment penalties, if pets are allowed, and other provisions, your rental agreement
should also include penalties for late payments. You must be very explicit about what the tenant
is expected to accomplish and what you, the owner, will do. This will stop arguments about who
pays the utilities, cuts the grass, and makes the plumber's appointment.
Make sure the tenant pays a one-month security deposit as well so you can pay for the expense of
painting, cleaning, and other preparations. Finally, confirm that your tenant has renter's
insurance.

To make a living, flip houses.
Flipping homes is best done in a hot market with a low supply of available properties and quickly
rising property prices since buyer demand and price growth are "built-in." You can have
problems remaining within your budget if it's difficult to discover houses to buy. In order to
reach your anticipated after repair worth, you must be knowledgeable about the market and
follow a precise acquisition procedure (ARV).

Information Sourced from main BHHS: How to Invest in Real Estate (bhhs.com)