I only not long ago paid for my initial townhouse, regulating it as my initial residence. I’m starting to lease out the dual bedrooms upstairs, whilst receiving the nearly-finished groundwork as my own room. After I get my taxes behind from my initial year’s payments, I would similar to to buy an additional skill so I can take value of the taxation mangle upon the debt seductiveness for dual properties. OR I can buy it, repair it up, as well as sell it again for the discerning profit.
Any ideas? I do not wish to be genuine about these things.
{ 10 comments… read them below or add one }
I would say land. But if you can buy another place and fix it up yourself so it would’t cost you alot then that’s even better.
buy some land and you know you wont have to worry about anything or anyone
you can’t go far wrong with property, unless you’re an idiot!
You could try house flipping. Thats when you buy a very cheap, run down house and fix it up and sell it for profit. (There’s a show on TLC about it). A guy bought a house for $450,000 and sold it for $674,000…not bad for 4 months of work!
Buying land is not a good investment unless you plan to build on it. If you do plan to build on it, it’s probably the best option, depending on where that land is.
If you’re going strictly house vs. townhouse, you’re usually going to get the best return on a house, since with a townhouse you’re at the mercy of the neighbors and the association that runs the building.
Buy the worst house on the best block. Make some improvements, and you’ll never go wrong.
If you buy & resell the home in just a few years time, be careful. With closing costs on this house & your new home, realtor commissions, and other expenses you may not make much. Talk to a realtor to get a good idea of what your property is worth.
I’d take it slow when you do the rental. Renting can bring in money but it’s a PITA. People who rent don’t take care of things the way they would if they owned it. Expect to spend more in maintenance, painting, cleaning, etc than you would otherwise. Also don’t be suprised if one trashes the place, bounces their rent check, or vanishes without warning. Not that all renters are bad, but do be prepared.
To buy the 2nd house you’ll also need something for downpayment money if you expect to qualify for competitive financing.
Why not get the rooms rented and see how that goes? You may find you HATE renting to others, or you may love it. And in a year you can also reevaluate based on current market value of this home, mortgage rates, and the economy.
l would take a coarse at your local, you will end up in a crap shoot otherwise
Land is only a good investment if you plan on renting it or building on it. Trying to flip it wont’ work unless you can get at a bare minimum, 10% more than you paid for it.
Also, you can only deduct the mortgage interest on your Schedule A on your primary residence. On any other rental properties it just goes as an expense against your passive income.
Buying rental property is a great way to build wealth. You get someone else to pay the mortgage, just make sure that you get enough in rent to cover all the costs. Don’t lose money every month just to gain equity in a property. The tax laws have gotten tighter on passive losses and will likely get more so.
The other answers are all good. I come froma mortgage background. One thing you may want to consider is that IF you live in a home for 2 years, then any profit from the sale of that home is tax-free (i.e. not gain from sale).
Thus you can do the “slow” flip. Each house you buy (MUCH better than townhouses) you live in for 2 years, fix it up to increase value, sell, and invest the profits in a NEW property.
The above answers are all good, just keep in mind one other thing – it sometimes takes as much as 50% down to get financing on bare land, whereas you may be able to get an investment property for nothing, or maybe 10% down.
I really like the idea of moving into a place, fixing it up over 2 years, then selling with no capital gains. Also, you can move out of this property, rent it, and move into the next one – you’ll have up to 3 more years to sell the one you moved out of (as a principal residence) before you have to pay taxes on the gains. Remember, though, you can only sell one principal residence every 2 years – meaning you can’t sell two at a time to take all the gains tax-free and get a bigger home.
Good luck!
Sean