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Short Term vs. Long Term Investments |
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When considering the purchase of any property you should determine whether it will be designated as a short term or long term investment. Do you wish to purchase a property, repair or improve it, and then make a quick sale? Or do you intend to keep the property, rent it, and go for the long term investment potential?
Obviously, the return on investment in a short term is quicker, and the rate will be higher due to the short time of the exposure. There are, however some risks associated with a short term investment. What if the property requires more work (and money invested) than expected? What if you are not able to sell it quickly? In situations such as these, your potential profit could be severely limited.
SHORT TERM |
LONG TERM |
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The property is in an area where property values are stable but not significantly increasing.
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You have the means or the connections for getting repairs done at a reasonable price.
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You are organized enough (and have enough time) to rehabilitate the property quickly.
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Your tax situation can withstand a possible capital gains "hit." |
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The long term appreciation rate looks favorable.
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You do not shy away from the idea of dealing with renters.
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You do not have the funds available to do a full scale "fix and turn."
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You need a continuing tax break. | |
Real Estate Reports 
