How To Make Money Off Small Town Home Investments

The objective of investments is to have a place to park some of your money, minimize your exposure, and make more money over time. In order to succeed at investing, you need to understand that it is part risk and part lucky planning. Risk is always associated with investing and is often the first significant barrier people have in deciding whether to get involved with investments or not.

But with proper research and planning, you can minimize the potential for catastrophic losses before you even invest a dime. People are often fearful of investing because they don’t understand the foundations and risks that can affect investment opportunities in the first place. One of the things people do is inflate their understanding of investments which leads to added risk, take on too many investments, which leads to added exposure, or act out of fear due to momentary market fluctuations.

So what is a person to do? First, you can hire a financial expert to help guide you. Then, you can take on risks by investing without really understanding the values and fluctuations of the market, or you can look for more long-term, more secure investment opportunities such as investing in real estate. No doubt, one of the safer, long-term strategies for investment is to buy real estate.

Types Of Income Opportunities In Real Estate

In order to make money in real estate, there are three primary ways.

  • Purchase to Sell: With a purchase to sell, you’re buying the property to sell whether you invest money for renovations or sell as-is. The benefit of purchasing a home to sell is that you can make some decent cash, especially in a seller’s market. The downside is that you can take a significant capital gains tax by doing so.
  • Purchase and Hold: With a buy and hold strategy, purchasers have a few different options. One is to buy the home, live in it, and sell it much later in time as you pay down the mortgage and increase equity. The second option is to buy the property with the intent to make rental income over time. The risk here is if you have any layovers between renters, something significant happens that causes loss of revenue, or you can’t charge enough rent to cover your mortgage.
  • Real Estate Investment Trusts: With a Real Estate Investment Trust, or REIT, you join forces with several other investors to purchase Real Estate. The bonus of this strategy is you can buy more Real Estate than you might as an individual and lower your risk along the way. The negative is that you only own a small share of the investment rather than entirely making your profits smaller.

As an individual looking to make money off small townhome investments, a good strategy may be the buy and hold method but with a tiny change. For example, instead of buying a single-detached home and renting it out, consider buying condos or apartments and renting those out instead.

The benefits of buying a condo or apartment versus a home are that the costs are typically lower. In addition, you have the Homeowners Association that will take on some of the day-to-day maintenance of the property outside the condo. As an entry to rental ownership, these may be an excellent first step to consider.

However, if buying to hold and rent out your property is the goal, then finding a centrally located place is ideal. Other considerations are that it has an excellent rental occupancy rate, access to major industries, and is affordable enough that you can charge more in rents than your mortgage are all factors to look for in your search.

For detached, single-family homes, you can look to the suburbs of major metropolitan areas that offer some of the keys we discussed earlier. For example, houses for sale in Moreno Valley provide you with an area of population growth outside of a central metropolitan area (Los Angeles) and stable occupancy rates.

By considering purchasing a rental property in a suburb surrounded by a large population density, such as Moreno Valley, you’re going to have increased demand for rental units while having lower inventory available, further driving the rental market upward and making you more income over time.

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