Real estate investing may seem like a far-off dream but doing the proper research into local New Orleans neighborhoods and consulting a seasoned Realtor familiar with renovations can help you decide whether to flip, rent out, or hold onto a NOLA home.
How to Determine Which Action Will Bring You the Most Return on Your Investment
If you’re looking for a way to make money in the New Orleans real estate market, you typically have three options: flip, rent, or hold. Here’s what you need to consider, based upon return on investment (ROI):
Should You Flip?
Home flipping, the process of buying a New Orleans property with the purpose of reselling it for a profit, has become a familiar term thanks to reality television shows like Property Brothers, Rehab Addict, and Flip or Flop. But how do you determine if a home has potential to flip?
A market where homes are affordable but the prices continue to climb could be an ideal place to flip a home. According to Wallet Hub’s 2017 analysis of the 150 largest U.S. cities in terms of the best place for flipping, New Orleans ranked #26 overall and #7 in terms of market potential. Market potential is based on several factors, including average gross ROI.
But the real estate market can be very unpredictable, and there is no guarantee that home flipping will earn you a handsome profit. So before you consider flipping your New Orleans home, be sure that you’ve thoroughly familiarized yourself with the neighborhood’s pros and cons. Do this by looking at other comparable homes available nearby, what kind of shape they are in, and what they are selling for. You should also consider the quality of schools in the neighborhood, transportation, and the local job market. Consulting a New Orleans Realtor with renovation experience can go a long way in mapping out a property’s potential.
What About Renting It Out?
If the prospect of flipping a home doesn’t sound like your cup of tea, but you’d still like to try to make some money in real estate, you might consider renting your home out. One advantage to owning a rental property is the tax breaks you will be entitled to: you can deduct your mortgage interest, property taxes, operating expenses, and maintenance costs.
Like those who decide to flip their homes, potential landlords need to consider the neighborhood, the quality of schools, other homes for rent in the area and what they’re going for, and the potential for new jobs nearby. Generally, you’ll be more likely to find reliable tenants in nicer neighborhoods with good schools, including Uptown, Marigny & Bywater, Mid-City, and the Lower Garden District in New Orleans.
Some of the advantages of becoming a landlord include:
- Being able to deduct money you’ve spent on your rental property on your personal income taxes.
- Building wealth over the long-term with minimal effort.
- Having the flexibility of managing your own business.
- The option of living in the property yourself, should you choose to in the future.
When Should You Stay Put?
You don’t need to flip or rent out your home to become a real estate investor. Real estate usually increases in value over time; if you’ve found the perfect home in a great neighborhood where you’d like to put down roots, deciding to just stay there – for at least five years, so that you can build enough equity in the home is critical to making a profit when you do decide to sell it.
In general, one of the best ways to build wealth over your lifetime is to buy a home, although there are always risks in doing so. The country could experience another recession, New Orleans could be hit with another hurricane, or a major employer could leave the area. But when prices fall, they will generally rebound.
Are you looking for advice regarding whether to flip, rent, or hold onto your New Orleans home? Contact a Satsuma Realtor to discuss your real estate investment goals and get answers to your investment questions.