Investing in real estate is a great way to diversify your portfolio and protect you financially from economic downturns. Real estate investments have the potential for significant returns, depending on which route you choose. While there is no right answer for the “best” way to invest in real estate, we highlight three ways to invest in the property below.
1. Buy a rental property
Buying an investment property is a great way to generate passive income and build wealth. As rent prices rise per year and your mortgage on the property remain fixed, owning a rental property increases your earnings as well.
One of the risks of buying a rental property is that, as a landlord, you are responsible for the costs of regular maintenance and any repairs needed. If you’re in the market to purchase a rental property, consider buying a new home. Older homes are more susceptible to repairs, which can result in lost money over time.
Recently built homes such as our new townhomes in Airdrie are an excellent investment, with no condo fees, that many tenants are searching for. The new structure and innovative solutions within the house mean you won’t need a large maintenance and repair budget for many years to come.
2. Rent out all or part of your own home
If you’re not concerned with privacy or having roommates, renting out a room or the basement in your home means you can generate passive income without taking out a second mortgage on a rental property. For new homeowners toying with the idea of renting out extra rooms, consider viewing our new homes in Cochrane with additional bedrooms, flex rooms and an optional basement development that can easily be turned into a rental space.
3. Fix and flip a house
Often considered the “wild side” of real estate investment, house flipping refers to buying a home, making repairs, and selling it for profit. While there is an opportunity to make a lot of money by fixing and flipping a house, many risks come with it.
House flipping requires a lot of time, effort, and expertise to pull off successfully. Many experienced house flippers recommend having a trusted network of contractors to ensure the cost of repairs doesn’t get out of hand, which can eat into, or completely eliminate your profits.
Furthermore, factors that are out of your control, such as the economy and the real estate market, play a significant role in whether the house will sell quickly. With all things considered, if it’s done well, flipping homes has the potential to bring in big profits, but the risks are very high.
If you’re new to real estate investing, one of the safest ways to get into the market with minimal risk is to purchase a newly built home to rent out.
Many tenants with small families are interested in new duplexes or townhomes in Airdrie, Chestermere or Cochrane for their family-oriented communities, nearby schools, and plenty of parks and playgrounds. With a new home, you can expect less maintenance and repairs as well as warranties from a reputable home builder.