Active “We Buy Houses” companies working in Real Estate Investing have increased substantially over the years. But what exactly is an Investment Company, and why are they so popular?
For “We Buy Houses” companies, it is important to know that long term investment in property can be very profitable. One of the best things about owning a rental property over time, after paying your mortgage payments every month and keeping up with insurance premiums, it’s unlikely you’ll ever experience total loss on your real estate investment!
Owning real estate offers an opportunity for growth as needing somewhere to live is always needed. Which means, there will never be such a thing as too many homes on the market! And when times get tough? The value of these properties don’t dip; instead prices remain stable because people need them more than ever before.
Cash is King for “We Buy Houses” Companies
Real estate investment can be a lucrative venture. Depending on the type of property you purchase and how it is acquired, your profits may start coming in immediately. For example, some “We Buy Houses” companies purchasing turnkey real estate investments (properties which have already been renovated with quality tenants), will begin receiving rent checks at the end of only one month!
Slowly Build Equity
Over the course of several years, not only will you be gaining rent money month-to-month, but you’ll also be (ideally) paying the mortgage using those proceeds. Once the mortgage is paid off using the rent money, the equity of the home builds your net worth.
Not only equity, but home values will also appreciate in most real estate markets. According to a study done by Zillow, the average home will appreciate in value from 6-7% year over year. The longer you build equity and hold onto investment properties, you’re more likely to make a greater return.
Low Maintenance Entrance
Achieving success as a real estate investor doesn’t have to be complicated – for starters, you don’t need to be licensed or take any required courses. Also, you don’t need millions of dollars on hand when you’re starting out, and there are many financing options available that can make investing in your first property an attainable goal.
On average when investing in a property, you’re most likely going to be required to pay 20% down and finance the rest through a mortgage. If you aren’t able to get a mortgage, there are several other low-interest loan options that can help you get started fairly easily.
Leverage Capital
The benefits to investing in stocks or mutual funds are much less tangible compared to those investors may see from purchasing properties. If a home is valued at $100,000 an investor may be able to purchase it for 50 to 70 cents on the dollar in cash and take out a mortgage for the remainder.
After some time, you can start diversifying your portfolio and even venture out of your original target market. You can invest in properties across the country and leverage property management companies to handle that property for you until it’s built up enough equity to resell.
Reap the Benefits of Tax Deductions
More savings are available to real estate investors than just leveraging capital. These can include but are not limited to property taxes, depreciation, and business travel costs. Moreover, it’s quite common to see a 1031 Exchange in order to leverage capital gains taxes. All this just ends up being cheaper for the business during tax season, leading to higher year over year profits.
You Can Put As Much Time in As Necessary
One of the best ways to invest in real estate, as well as make some good money on the side is through flipping houses. Unlike turnkey investors who simply use real estate investing for supplemental income, fix-and-flip types must take their work seriously or risk losing a lot more than they bargained for when purchasing and reselling homes.
Either one of these approaches to real estate investing can be extremely lucrative. While most people may think of investment in the home-flipping context, it’s very possible to let your investment business sit on the back burner if you’re more focused on turnkey properties.
Manage Your Own Risk
Did you know that real estate investors can choose between lower class assets and higher class assets? “Lower-class” properties will usually produce a larger return on investment, but can also be a riskier option. The same is true for the opposite – high-quality properties are generally safer than low quality ones, but they will have less of an impact in terms of profit potential. Investors need to pick their investments based on what suits them best.
Look Into Joining or Starting a “We Buy Houses” Company
There are so many different types of real estate ventures to choose from, and each with their own advantages. From safe investments that will yield predictable returns, all the way up to risky flips for huge profits- there’s a “We Buy Houses” opportunity out there for everyone!