Long Term and Short Term Real Estate Investing

In the past investing in real estate was usually a long term commitment but with the sudden explosion in the market short term investing has become increasingly popular. In todays market you can buy a preconstruction real estate investment and sell it in a few short months for hefty profit. Few stocks are rising as fast as real estate and with the increase in risk many stock market investors are packing up and heading to both short term and long term land development investing.
Benefits of investing in real estate short term vs the long term:
By investing for the short term many investors get the profit they want with the flexibility they need. Here are just a few reasons some investors lean term short term real estate investing.
1. Time to See a Return This may seem fairly obvious but it has to be mentioned. The quicker you get your investment money back in your pocket the sooner you can use it to make more investments. Many short term investors like the fact that they can reap the rewards sooner with short term investing while long term investors usually buy real estate way before the land significantly goes up in value.
2. Larger Profits Then in The Past In the past short term real estate investing wasnt even an option but in todays market its not uncommon for an investor to buy and flip preconstruction condos or townhouses every few months. The financial gain is usually smaller then long term investing but as long as there is a significant profit investors are more then willing to take the smaller payday for the chance for multiple investments opportunities.
Example:
Lets say you buy two preconstruction condotels in Florida in preconstruction phase and turn a $200,000 profit each in 2 years for a total of $400,000 in 2 years. That is a good example of long term real estate investing, two years doesnt seem like a long term investment for many investors out there but in todays market two years is a long term investment.
Now lets say you buy the same two Florida condotels and flip them in 6 months and turn an $80,000 profit each for a total of $160,000 profit. Now you if you buy and flip every 6 months in two years youll have $640,000 in profits compared to the$400,000. Also, please note that as long as you use the profit from the last investment (its called a 1031 exchange) you can reinvest the money and NOT pay capital gains.
3. More Overall Profit As the example above shows you investing in the short term is more time consuming but ultimately more money. While long term investing is more of a set it and forget strategy.
If you have any questions about long term or short term real estate investing feel free to visit my website or give me a call.