Are you looking for a hedge against inflation? Is the volatile stock market causing you to consider a different investment strategy? Why not consider real estate? Real estate is a very unique asset class. It can afford you cash flow, tax breaks, equity building, and a hedge against inflation.
When you acquire real estate for investment, there are many things you’ll want to consider. Will a property generate adequate rental income? Which properties hold the best potential to appreciate in value? What financing options are available? Who will manage the property? What are the risks, tax benefits and tax consequences?
With the right team in place, you can make a proper analysis of a property and move quickly when good properties present themselves. In addition to a good Realtor, you’ll want to seek advice from tax advisors, financial advisors, property managers, and lenders. With the right strategies, you can look forward to owning an income-producing and highly appreciable asset.
Long-Term of Flip?
Many investors look at the long-term strategy of owning investment properties, but others consider rehabbing and flipping property. This can be the most capital-intensive form of real estate investing and thus the riskiest. Of course, it can also be the best way for you to net a large profit! Flipping is not for the faint of heart. There are risks. You’ll need to consider your carrying costs while the home is being refurbished. It takes time to obtain permits and approvals. You also need to take the current supply chain issues into account. You can do well flipping homes, but be sure to count the costs. Be sure to time the market well, too.
Some markets experience better price appreciation than others, but every market offers some opportunity. Historically, Hawaii is a capital appreciation state, which makes investing in our islands a safe bet over time. The median price for single-family homes has gone up 524% since 1985 on Oahu! That’s an average of over 5% per year. When you take into account all the other benefits of owning real estate, investing in Hawaii property makes good sense.
Renting Out Your Property
If you own investment property or are looking to invest, Hawaii Life provides short-term, long-term and vacation rental services. Our property management team is always willing to provide you a pro forma. A pro forma will help you analyze how a property will perform based on current rental data and market dynamics. You can learn more about our property management team by visiting the website here.
One of the best things about investing in real estate is that you can leverage your investment. You can put down a fraction of the home’s cost and finance the rest. How many other investments allow you to invest in assets worth more than the money you have to invest? Plus, the rental income will help you pay down the mortgage. Over the years, as the mortgage decreases, you’ll hold more of the investment and you’ll increase your rate of return because you’ve paid down the mortgage (via rental income) and by the appreciation you gain. No wonder so many savvy investors look to real estate. If you aren’t convinced, look at what some of these famous people said about real estate:
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” – Franklin D. Roosevelt, U.S. President
“Buy land, they’re not making it anymore.” – Mark Twain
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” – Andrew Carnegie
Real estate is a great way to diversify your investment portfolio. Yes, there will be peaks and valleys in the market. And, there will always be some risks. But, if you hold onto your investment property long enough, you will make money. And, while you are holding onto it, you can let the rent cover your costs and you can enjoy some cash flow, too.