Room for Growth

• The housing market often has ample room for growth, which means that the right house investment can quickly grow in value. Housing markets rely on the availability of credit and the supply and demand for housing in a given area. By studying these trends you can identify homes with values that are low but poised for growth. Even when markets are healthy and prices are rising steadily, the desire for home ownership and the demand for housing in markets where populations are growing can mean an opportunity for profit.
  
  

Taxes

• The taxes that apply to residential property are different for private residences and investment properties. If you buy a home as an investment, you will not be able to roll over the money you receive from the sale to buy a new home without first paying taxes on your profit. Real estate law defines an investment property as one that you purchase and then sell without ever living in as a primary residence. This means that even a vacation home that you own for many years is not exempt from the taxes associated with home investing that can reduce or eliminate profits.
  
  

Options

• Home investors have numerous options available to them. Besides the ability to buy homes in different neighborhoods and regions, investors can select among small single-family homes, larger luxury homes, multifamily homes to rent out, and vacation homes in resort areas and outside major cities. These options mean that home investors can commit as much or as little money as they want. It also means that when one sector of the housing market slows, there are still potential areas for profitability in home investing field.
  
  

Risk

• Home investors take on a great deal of risk with each property they buy. Just as there is always a possibility for growth there is also the chance that falling prices will fall even further, or rising prices will quickly reverse their direction. Because home investors may use loans to make their investments, the prospect of paying too much interest on a home that loses value is especially dangerous. Investors may face a choice between selling for a loss or keeping a home for much longer than anticipated, leading to costs associated with property taxes and maintenance, until its value rises and it become worth selling.