Diversifying Your St. Louis Real Estate Portfolio
Many investors prefer to maintain autonomy and control when it comes to their money; the St. Louis real estate industry is rich with diverse opportunities for those seeking this type of investment. The best investment for you depends on your short and long term goals, liquidity and time. However, no matter what type of investor you are, there is an opportunity for you in the St. Louis real estate market.
Real Estate Investment Trusts
Real Estate Investment Trusts (REITs) are companies that own and/or finance income producing real estate, and offer investors the opportunity to own part of their portfolio through the purchase of stock. REITs are similar to mutual funds in the diversity of their asset portfolio, all of which contribute to steady streams of income paid out annually to shareholders in the form of taxable dividends. If you don’t quite have the cash on hand to invest thousands of dollars to purchase property or the time to fix and flip a home, REITs are a great lower risk option.
Fix and Flips
If you have the liquidity and credit to either purchase an entire home outright or put down at least 20% of the home’s value and take out a mortgage on the rest, fix and flipping real estate is a great investment opportunity. You will want to be aware of the fact this type of investment requires a bit more time and effort than simply buying and holding a property. Fix and flipping homes involves purchasing properties preferably below market value, spending money on capital improvements that increase the value of the home and subsequently selling the home with relatively quick turnaround. While the returns can be very rewarding, the commitment can be an issue for some.
Rental Properties
With capital requirements similar to fix and flip investments, buying rental or income producing property can have very a high return if you have the time and capital to commit to it. The current rental market is relatively competitive among renters depending on where your property is located. To estimate your potential profit for a property, first examine how much capital you can commit to its purchase or mortgage, as well as the insurance and tax payments. You will also want to evaluate how much, if any, capital will need to be spent on repairs or improvements to prepare the home for renters. Lastly, you will want check out rental rates for comparable properties in your area and determine whether your monthly inflows exceed your monthly outflows. You will want to have a profit margin with some cushion in it, so you aren’t strapped for cash in case of repairs or vacancy.
The market for investment within the real estate industry has a place for everyone. With home values rising between 3-5% per year on average, great opportunities for profit are waiting for those looking to make moves now. When it comes to St. Louis real estate, you get out what you put in and having in depth knowledge of the market certainly pays.