There are many opportunities to make good investments in real estate. It's the kind of investment where you can choose your level of involvement and be flexible with it. If you play your cards right, buy the right property at the right time, have the right information and motivation to help develop and maintain the property, investing on real estate property can actually be quite a lucrative venture for you.
Let's say that you're interested to buy Seattle real estate and you have investment in mind when looking through Seattle homes for sale. Here are a few ways for you to make some money on your future property:
1. Capital gains exclusion - Let's say you bought a Seattle real estate property and you owned it for at least five years. Provided you lived in the house for a minimum of two years out of the five years you owned it, you could be eligible for capital gains exclusion. This means that you can sell the house for whatever reason (moving up, moving to a different state, etc) and keep the profit from the sale, tax-free. Each state has laws that may present different restrictions, though, so it's better to talk to a real estate lawyer about it.
2. A steady flow of rental income - Let's say you looked through Seattle homes for sale in a great rental area. Buying property in a great rental area can potentially earn you a steady stream of income or, at the very least, you can consider the rental income a huge help in paying off the mortgage. Even if it doesn't cover the entire mortgage payment, at least you get a significant help in paying off the monthly amortization and building equity on the house along the way. You just have to be careful that you understand your responsibilities as a home owner and that you have some cash lined up in case you encounter difficulties with finding tenants to rent your property.
3. Buying low and selling high - At times when you find the right property to buy in a soft market, you can put a little bit of money in it to spruce it up, rent it off while waiting for the market to turn, and sell it at a higher price once the market is at a point where the inventory is low and the buyers are many. If you know how to spot great real estate deals, this could really work out very well for you. For example, if you see a house that just needs some landscaping, some staging, and a few fixes and improvements, you can invest on that and sell it for profit. Just be careful not to invest on properties that are sold at a low price because of existing problems that may be harder to resolve and would even probably pull down the price further than when you bought it. You can even refurbish older properties in good neighborhoods and see how the value jumps up significantly.
4. Building equity on the property - The most obvious, of course, is building equity with every monthly payment that you make. In the future you can take out an equity loan for whatever purpose you need it for.
