Rehab Properties – A Short or Long Term Investment?
Buying a property that needs work can be a great way to start your real estate investment portfolio. With careful planning, the math can really stack in your favor – but do you flip for a lump sum or buy and hold to see a steady return on your investment?
Rehab for Resale
Renovating a property for the resale market is a common project for many first time real estate investors. A quick turnaround means that first trust deed loans are a viable source of funding for you – keep focused and the loan will be paid off before the rate of interest really starts to hit.
Of course, any investment comes with risks, but today’s market is relatively stable, so the chances of being knocked by a sharp drop in value are much less than in recent years. That being said, it’s still important for you to know how to navigate the risks present in today’s market.
Rehab for Rental Income
For rehab properties that require a lot of work, the interest rates of a trust deed loan won’t work – but don’t dismiss the project right away. Decide to renovate for the rental market and the rehab can be done in stages while you lease the property. Your investment will be safer for having tenants living there and the rent you collect can be used to fund the next stage of the project.
Opting for a buy and hold rental also means that your investment will be protected from any market volatility and almost always secure you good rate of return.
Whether you decide to sell or rent, taking on a rehab property can be hard work but ultimately incredibly rewarding. Not only can rehabbing give you a great return on your investment, but also contribute to neighborhood regeneration – and that’s a great way to showcase your property management talents.