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Choose your Minnesota home investment wisely April 15, 2008

Posted by minnesotarealty in Minnesota Homes for Sale.
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Investing in a Minnesota home can be seen as a difficult subject, however that is only since there are so many choices. As an investor, you have an almost unlimited array of ways to make money. But that means that you must be able to to choose wisely. You have to choose the extent to which you’ll educate yourself regarding each facet of real estate investing, who you want on your team of experts, where to seek properties, whether or not a particular property is the right one for you – and on and on.

One decision you will inevitably face is how you will use a piece of property once you have bought it. You may not be the type of real estate investor who wants to buy a piece of property and hold on to it for an extended period of time. You may not want to have to deal with renters and property managers or to see to the maintenance of a piece of real estate. If you don’t see these sorts of activities as appealing in the slightest, your other option is flipping.

Flipping a property is simply the practice of selling it immediately after you buy it, often at the same closing. At the very latest, flippers generally start setting up a sale on a property the same day that he or she purchases it. Some flippers will even start the process before they own the property, which is risky business. However one goes about doing this, flipping inevitably involves a mad rush to the auction block, since a vacant property is always a liability.

However, when you hold a piece of property, you are afforded the opportunity to increase that property’s worth. If you manage to find a great deal, the price you paid for it will likely represent only a drop in the bucket compared to what you can potentially make from it. And when you do decide to sell it, you’ll be able to do so at your convenience and get more than you would have by flipping.

This is true particularly if the property is a multi-family residence like a high rise apartment. If it is a good property in a good location, and you take care of it, chances are that occupancy is going to stay high. With a property like that, your earnings tend to increase exponentially. If you manage your property well, this is almost assured.

On the topic of management, you’ll need to decide between performing that function yourself and hiring a management company to do that for you. If you are the owner of a particularly large piece of property, or if you own many pieces of property, you will probably want to employ a property manager. Ken McElroy, author of “The ABCs of Real Estate Investing,” advises that you employ a property management company so that your talents and your time will be used more efficiently elsewhere.

These are the types of things you will have to consider as a property owner.

In the end, however, whether you choose to flip a property or hold it depends on what you’d rather spend your time doing. Perhaps you thrive on the fast paced work that flipping entails. Perhaps the adrenaline rush feels exciting to you. In that case, you ought to learn the proper way to flip properties (which is to wait till you actually own a property to arrange a sale and don’t approach buyers at the very closing where you obtained a property).

However, if the concept of caring for a property appeals to you, then purchasing and holding might be right for you. Depending on your particular talents, you personally may be able to find it more profitable to use one method as opposed to the other. It’s totally up to you.