Monday, April 14, 2008

How you will use your MN property after you've purchased it?

Minnesota property investing can appear to be a complicated subject, but that is just since there are so many decisions to make. When you invest, you have an almost unlimited number of ways to profit. That, however, entails being able to make choices. You have to decide how much you'll learn about each element of Minnesota real estate investing, whom to add to your team, where to find properties, whether or not a property is the right one for you, and so on.

A key question you will inevitably face is how you will use a piece of property after you've purchased it. You might not be the kind of real estate investor who wants to purchase a property and keep it in your possession it for a long time. You may not want to grapple with property managers and tenants or the maintenance of a piece of real estate. If these activities do not appeal to you in the slightest, the other option at your disposal is flipping.

Flipping a property is the practice of selling it immediately after you buy it, often at the same closing. At the latest, flippers tend to begin preparing to sell a property the day that he or she buys. Some will even begin the process prior to even buying the property, which is very risky business. However one goes about doing it, flipping inevitably entails hurrying to the auction block, because a vacant piece of property always represents a liability.

However, when you hold a piece of property, you are afforded the opportunity to increase its value. If you manage to find a great deal, the price you paid for the property will likely represent only a tiny fraction of what you can potentially make from it, and when you finally decide to sell it, you will be able to do so at your convenience and get more than you would have by flipping.

This is true particularly if your MN home is a multifamily dwelling like an apartment high-rise. If it is a good property in a good location, and you maintain it, occupancy is probably going to stay high. With a property like that, your earnings tend to grow exponentially. With good management, that is virtually certain.

Speaking of management, you'll have to choose whether you will do that yourself or hire a company to do that for you. If you are the owner of a particularly sizable property, or if you have many properties, you'll have to employ a manager. Ken McElroy, author of The ABCs of Real Estate Investing, advises that you hire a real estate management company so your time and effort will be put to better use elsewhere.
These are the sorts of things you'll have to keep in mind if you hold a property.

In the end, however, whether you choose to flip a piece of property or hold it depends mainly on how you'd prefer to spend your time. Perhaps you would enjoy the fast paced workday that flipping entails. Perhaps this rush sounds like an adventure to you. If this is the case, you ought to learn the right way to flip properties (i.e., wait till you own a property to sell it and not to approach buyers at the very closing where you obtained a property).

However, if the concept of caring for a piece of property seems appealing to you, then buying and holding might be right for you. Depending on your particular skill set, you personally may be able to make more money working one way as opposed to another. It is completely up to you.