Author: Stuart Athinson
Real estate investment has become a hot topic over the last decade or so. Would-be investors seem to be around every corner. They attend seminars, buy investment classes on DVD and study the real estate market religiously.
The world of real estate investing seems to be an exclusive and exciting realm where only a privileged few are successful. If you have always wanted to be a part of this world, you may feel that you are too late now that the real estate market has taken a sharp down turn.
However, it may still be possible to start a successful real estate investment career even in a slow real estate market. The most important point to remember is that real estate investing isn’t all about buying a house, improving it, and selling it right away. There are many facets to the world of real estate investment.
One of the most stable forms of real estate investment in a weak or unstable real estate market is rental properties. A poor real estate market means that fewer people are buying their homes and more people are renting. Being the owner of a rental property can put you in a position to be a successful real estate investor very quickly.
Renting out your property lets you build equity while your renter basically makes the mortgage payments for you. You will be stuck if you can’t find a renter for a period of time, but this isn’t very likely. In a slow market where buyers are too afraid to buy, you won’t be at a loss for people who want to live in a house without a mortgage.
If you are patient and don’t need to turn a profit right away, today’s slow real estate market opens up a variety of opportunities for you. Homes are being foreclosed every day, and many homeowners are desperate to get rid of their property before it is foreclosed. You can buy a foreclosed property as a real estate investment for far below its value. If you have great timing and a lot of money in savings, you can even snatch up one of these properties with a cash sale. You’ll have no need for a mortgage and can hold on to the property until the market starts to look up.
In the mean time, you can make improvements to the home that will make it more desirable to future buyers. You can then wait for a better time before putting it back on the market and enjoy a tidy profit on the improved property. This real estate investment tactic is not for beginners or the faint of heart, but it is effective.
In real estate investment, as in most other types of investments, the bigger risk yields the bigger reward. If you are willing to go out on a limb and invest in a property that will not immediately give you a profit, you’re likely to come out far ahead in the future. If you are looking for a lower-risk investment, renting out your property is a fantastic choice in a slow real estate market.
Author: James Kobzeff
This article covers six dynamite real estate investing tips intended to help anyone just getting started in real estate investing to successfully launch and hit the ground running with real estate investment property.
1. Develop the Correct Attitude
To stand a chance of succeeding at real estate investing, foremost, you must understand that real estate investment is a business, and you will become the CEO of that business.
As your first order of business, then, it’s crucial to develop the correct mind-set about investment real estate and be able to make this distinction between buying a home and investing in real estate:
“You buy a home to live and raise a family; you buy real estate investment property to pay for the home, live comfortably, and raise your family in style”
As one very successful real estate investor said, “Only women are beautiful, what are the numbers?” In other words, you will not succeed at real estate investing until you acknowledge that it’s not curb appeal, amenities, floor plan, or neighborhood that should turn you on or off to the investment opportunity; what counts most is the property’s financial performance.
2. Develop Meaningful Objectives
A meaningful set of (realistic) objectives that frames your investment strategy is one of the most important elements of successful investing. Yes, we may all desire to make millions of dollars from real estate investing, but fantasy is not the same as expressing specific goals and a method on how to achieve it.
Here are some suggestions:
How much cash are you willing to invest comfortably? What rate of return are you hoping to achieve by making the investment in real estate? Are you expecting instant cash flow, looking to make your money when the property is resold, or merely looking to achieve tax shelter benefits? How long are you planning to hold the property before you dispose of it? What amount of your own effort can you afford to contribute to the day-to-day operation of running the property? What net worth are you hoping investing will help you to achieve, and by when would you like to achieve it? What type of income property do you feel most comfortable owning, residential or commercial, or does it matter?
3. Develop Market Research
If you’re new to real estate investing, you undoubtedly know little about investment real estate in your local market. So, do market research to learn as much as you can about income property values, rents, and occupancy rates in your area. The better prepared you are, the more likely you are to recognize a good (or bad) deal when you see it.
Here are some good resources:
(a) The local newspaper, (b) A local appraiser, (c) The county tax assessor, (d) A qualified local real estate professional, (e) A local property management company
4. Run the Numbers
I can’t stress enough the importance of running the property’s cash flow, rates of return, and profitability numbers. Remember, real estate investing is a business, and as the CEO of your investment enterprise, you’ve got to know what you’re buying, especially if you’re trying to determine which of several investment opportunities would be the most profitable.
You have two options:
(a) Invest in real estate investment software. This will enable you to discover for yourself the investment property’s cash flow and rates of return, and create your own analysis reports. Plus, by running the numbers yourself, you gain a broader understanding of real estate investing nuances, and in turn might be less likely to fall victim to the wiles of someone with little concern about how you spend your money.
(b) At the very least, work with a real estate professional that has invested in real estate investment software and can calculate, present, and discuss the property’s financial data with you.
5. Develop a Relationship with a Qualified Real Estate Professional
Working with a qualified real estate professional is a great way for beginners to get started with rental property investing because an astute professional can acquaint you with local market conditions, recommend a property that meets your investing objectives, and discuss strengths and weaknesses about specific property performance.
Here’s a warning, however: Work with a real estate person who understands investment real estate.
Be sure the agent has a firm grip on key financial measures inherent to real estate investing, knows how to measure profitability and rate of return, has the ability to present the data you need to make wise investment decisions, and, most importantly, shows a genuine interest in how you spend your money. The last thing you want to do is to get involved with a real estate agent that would throw you under the bus just to make a commission.
Here’s a good way to interview for an agent. Ask them for the property’s cap rate and then request an APOD. If their response (even to these basics) is to stand there looking at you like a deer into the headlights of a car, find another agent.
Author: Brad Wozny
What is the need of a real estate investing institute? It can act as mentor to a layman in becoming a successful real estate businessman. The question now arises is, how can this be done? Depending on the institute’s offering, help is generated by giving access to various tools needed so that all the students can be successful.
Software is designed to maintain and systematize the business, protecting assets by writing legal contacts, and evaluating real estate value. The chief work of the real estate investing institute is to examine the strengths and weaknesses of individuals and give them access to the mentors by e-mail, phone, and fax.
The real estate investing institute is there with variety of options on investing in real estate – pre foreclosure & foreclosure, lease, discount mortgage, tax deeds, tax lien, probate and creative financing.
The real estate industry is one of the most booming sectors. As such the coming decade would be a big opportunity for the educated real estate investor. The real estate investing institute can help you decide on the fresh plans and opportunities which are both practical and less time consuming as well as adaptable to your busy schedule.
The real estate investing institute focuses on two important programs – ‘real estate investing techniques’ and ‘investing power tactics’. The techniques cover topics like foreclosures, single-family homes and Roth IRA investment. Power tactics deals with matters such as obtaining profit on foreclosures, hidden real estate investment and judgment investing. All these are an integral part of learning in a real estate investing institute.
One thing, one should remember is that; not everyone gets rich overnight. The real estate investing institute can teach you how to be successful in real estate investing but you have to be clever and hard working enough to succeed. The mentors and instructors of the real estate investing institute are always there to teach you so that you can be successful in a particular area or over a large section of investing formalities.
Author: Kirsten Hawkins
Getting into the real estate business can be one of the most rewarding, yet tiresome occupations out there. Whether the rewards outweigh the downfalls of the position really does depend on the person looking into the career. If you are a family-oriented person or someone who likes to spend a lot of time to themselves or enjoying the more leisurely things in life and you are really not looking to give these things up (at least for a while), real estate may not be the right gig for you.
Generally, getting settled into the real estate business can take up to six months, or even a year! Of course, a year does sound like an extremely long time to get into an occupation, but if you think about it and take into consideration all of the steps that are involved, that time frame is fairly reasonable. All real estate agents start out in pre-licensing schools. Pre licensing schools are basically classes that teach prospective real estate agents the ins and outs of the business itself. In such classes, laws, dos and don’ts of the business, basic rules, and sales tips are all discussed in detail. Pre licensing real estate classes can take up to three whole months to complete, and successful completion of the classes should lead to a successful passing of the real estate examination. Passing the real estate exam is nothing like the SAT however; it takes long hours of studying minute little details as well as broad, more general real estate information to successfully complete the course and pass the exam the first time. And passing the exam on the first time is always the goal!
After completing the required pre licensing courses and passing the real estate licensing exam, there is the actual time frame that it takes to get into business to consider. Of course, you are going to have to decide if you want to go into business for yourself or go to work for a real estate company, such as RE/MAX or Century 21. Do take into consideration that it might not be the smartest idea in the world to immediately go into business for yourself, and there are several reasons for this. The first is that when you are just becoming licensed and getting into the real estate business, you don’t know if you want to do this for sure or not. Sure, you think you do and that was why you decided to spend all of your money on time on classes and exams, but the reason real estate agencies are always hiring is because the turnover rate in that line of work is extremely high. Like most other sales jobs–the real estate business is NOT for everyone, and do you really want to find out that you hate your line of work after you have signed a 12-month lease on an office space and hired a secretary? I didn’t think so.
Author: Syd Z. Nohcud
The first step to building wealth through real estate investing is to buy your own home. Instead of making rent payments that pay off someone else’s property, it makes more sense to make mortgage payments to pay off your own.
This way you not only are not only investing your payments in a property, you are able to take advantage of capital gains.
As you increase equity in your home, you will be able to use it to help you purchase other properties.
After purchasing your own home, the next most common step in real estate property investing is to buy a rental property. If you buy well and get a good rental return with minimal outgoings you will not only take advantage of capital gains but the rent you receive will go along way to paying your mortgage.
As you gain equity in your property and pay down your mortgage, you will be in a position to purchase yet another property and repeat the process.
You need to be careful to minimize the risk by buying properties at below their market value, preferably when market prices have dropped.
This is because real estate prices increase over time and if you are prepared to hold onto property, you will always make money in the long term.
Unless you are wealthy, you will need to take out a mortgage to buy real estate property. A mortgage loan uses property as security for a loan on the property.
A mortgage allows you to purchase real estate with a down payment and repayment terms so that you do not have to pay the full value of the property immediately.
If you default on the payments, foreclosure requires a judicial proceeding which provides the borrower with some protection.
Real estate has historically offered investors far better returns than most other investment options.
With most banks prepared to finance ninety percent of the value of property values, you only require a deposit of ten percent and the ability to make the monthly payments to repay the loan.
Therefore, if you buy conservatively you place yourself in an ideal position to make excellent profits. In fact, real estate has traditionally returned substantially more than average stock market investments over time.
As well as building long term wealth, property investment can offer tax advantages under certain circumstances.
Get advice from your accountant as to whether your circumstances would allow you to claim tax benefits.
Another advantage of real estate investing over stock market investing is that the prices are flexible. With real estate you can make an offer that is lower (sometimes substantially so) than the asking price.
Stock market prices are set and do not allow you any room to move. As a result, you can sometimes get excellent property buys when the seller needs to sell quickly and is prepared to accept your offer.
Author: Geri Mason
There are 10 basic ways of making money in a real estate investment.
If you are interested in pursuing a real estate investment opportunity, it is necessary that you get acquainted with these possibilities so that you can better evaluate your position.
1. Property Appreciation. You can simply buy real estate property and wait until the right buyer offer comes along with an offer that is profitable to you. To realize the highest possible property appreciation value, you should buy a property in an area with a projected demand growth higher than the supply curve.
2. Property Depreciation. To maximize after-tax profits and benefit more from declaring a loss for depreciation, buy property that has its value primarily in the buildings and structures because the value of land does not depreciate.
3. Equity. You normally increase your equity with every payment you make. In applying for a loan, make sure to get the lowest interest rate that you can so that more of each payment go towards the principal.
4. Cash Flow. If you buy rental property the right way, you can have your tenants paying all the operation and maintenance costs including the mortgage loan and still have enough left over to realize a positive cash flow.
5. Buy Low. Always buy below the market to get instant equity that can be converted into a profit when you sell. Negotiation skills are the key to buy low as you have to convince the seller to sell lower than the market for any number of advantages like fast closing, cash payment, and assumption of some debts or liabilities.
6. Sell High. Get the property ready for the market, make it look good and easy to buy and find the right buyer to get the best offer.
7. Offer Financing Assistance. Sellers often get significantly more money for a property if they offer financing assistance. You can agree to the buyer to make a lower down payment so that you can get more proceeds from the loan package.
8. Change Use. You can convert the use of the property to make it worth more to the prospective buyer. This may mean turning condominium units into apartments or vice versa or a home into a commercial office space.
9. Repair and Renovate. Repair all that needs repairing or replacement and make improvements to raise the monetary value and visual appeal of the property.
10. Sell in Parts. If you have a tract of land or a relatively big lot area for a home, you can split the extra land area and sell it off for a profit.
Author: Stephen Campbell
Investing in residential real-estate and making money out of it could be challenging as it requires a lot of hard work and intelligence. However, many people do residential real estate investing in spite of knowing all the pros and cons of this investment. Succeeding in residential real-estate is quite difficult. One cannot get success overnight. One needs to develop a plan and execute it in order to succeed. However, it is important for a person to know which would be the best time to start investing in residential real-estate. It is quite difficult to achieve success in this field.
However, one can take help of various statistics that would help proceeding. One should know everything about residential real-estate investing before getting down. The investor should be aware of various factors that would effect the residential-real-estate investing. There are few basics that an investor must take care before residential real estate investment. These days one can also search for information online. There are many real estate investing-communities online that provide with various products and services to investors for residential real-estate.
Economic factors influencing
The investor needs to check for all the economic factors that would influence the investing in residential-real-estate. Variables like employment levels and income levels needs to be evaluated well. Some other factors like interest rates, wage rates, transaction costs, and purchasing power also should be calculated well. The relationship between national economy, regional economy and local economy should be inspected well. This would help for an investor to identify all the possible effects of all the variables on residential-real-estate investment.
Social factors influencing
Territory and companionship are the basic desires of people. Cost and prestige of certain residential real estate evokes desire of people to purchase them. Various social factors like age distribution, crime rates, education, and pride of ownership are considered while analyzing residential real estate investment.
Some other factors influencing
Some other factors effecting residential-real-estate investing are legal, political, and governmental factors. One needs to determine and evaluate these factors too. These various policies affect the demand and ultimately the prices. Existence of various amenities like access, public transportation, schools, police protection, and fire protection influence the demand and price for residential-real-estate investing. Environmental, physical also location factors influence residential real-estate investment. Location and situation would allow the investor to analyze and make proper investments. Site features establish value allowing investors to use the inherent resources. Size of the land and topography of land is also considered while investing. The situation also attributes establish value by virtue of proximity to some other resources. Some of these various resources include a shopping center, a school, a freeway, central business district, a waterfront, a dump, or a sewage treatment plant.
Author: Kent Hamilton
Subject to real estate is the absolute best way to purchase homes, and it is what has allowed large real estate companies to amass a very large number of properties. The official name for this technique of acquiring homes is called “subject-to”. That’s for the reason that you purchase the property subject to the existing financing the seller already qualified for.
Many investors resist trying to get sellers to go along with this. But once you get the first one under your belt, your comfort level increases radically, and the next ones come with ease. When you purchase a home subject to real estate, you are responsible for the payments on the loan. The seller will deed the property over to you, so you will officially be the owner of the home, but the mortgage will stay in the seller’s name.
It’s very important that you explain to the seller that the loan will remain intact until you find a buyer. You should by no means give a time limit on how long the loan will stay with the seller. There is a way to do a real estate investment deal with no money down.
Many investors are so anxious to complete their transactions that they well promise the seller that they will find a buyer who will pay off the rest of the loan within a few years. Don’t do this, because it’s impossible to confidently predict what the real estate market will look like in the future. If you cannot sell the home, the seller will be angry with you because you have failed to keep the promises that you have made.
There is specific paperwork that is needed when you transfer a title from a seller to you as the buyer so make sure you fill out the correct forms. These can be found at not cost to you from any respectable firm. You will regret it if you don’t get everything filled out properly up front.
When you attempt to make money in real estate through a subject to real estate deal, keep in mind that the sellers are counting on you to keep your promises to the letter. When you say that you will make the payments, you must adhere rigidly to the payment schedule that has been established, or else the sellers’ credit will suffer.
If you destroy somebody’s credit rating, intentionally or not, you’ve done something unethical. This rarely happens, subject to real estate laws, but you still need to tell sellers that lenders may decide to request full repayment of a loan if they notice that the property has a new owner.
This could be because of the specific contracts that the lenders create with the sellers that includes a “due upon sale” section. As long as the person lending get their interest payment each month they don’t really concern themselves with where the money actually comes from. Right now lenders trying to keep their portfolios active and want to keep as many notes as possible, since the foreclosure rate has been so high.
Author: Kent Hamilton
Investing in real estate has made people independently wealthy than any other type of investment, but it is not a venture to be taken lightly. There are many things that anyone starting a rental business should know before they are investing in real estate.
Of course, if you are going to be investing in real estate, you are going to need to successfully evaluate properties for their investment potential. The potential of a property depends upon so much much more than its rent. Several other factors go into determining if a property is a sound investment. In addition to familiarizing yourself with these factors, you are also going to need to know the law regarding landlords, tenants, taxes, discrimination, and accounting.
Initially, you need to decide what type of property you want to invest in. For example land, commercial, residential, etc. Residential properties are defined as single family homes, duplexes, and multiplexes even though structures with over four units are sometimes considered commercial property.
Second, when you decide to start wholesaling real estate, you need to determine where that real estate should be. You might decide to stay close to home, or to buy property near places you would like to visit or to spend a vacation. You may be able to write off travel expenses. You may also want to seek real estate in growing communities and places where real estate is expected to appreciate, but this is a much riskier way in which to invest in real estate.
There is still a good amount of speculation even though the high number of foreclosures on the market today would make you think that it is a no-brainer. When you take the risk of flipping a property you increase the rate of short term capital gains and these added taxes and expenses are unavoidable.
This type of real estate investing can be compared to day trading. It has the potential to make a lot of money quickly, but it also has the potential to lose a lot of money fast. This is not for the inexperienced patron. It is not a good, initial secure base to build your investment business on.
Once you have done your research and determined that you want to invest in rental property you will need to decide where the property will be located whether it will be residential or close to home. After deciding this you will be able to ascertain which property has the greatest potential to give you the highest return.
That will depend upon what you are currently investing in, what you are making now, the way in which you seek to develop your realty portfolio, how old you are, the amount of spare time you can set aside, what your long-term intentions are, and how expensive your needs are. You must also decide whether you are looking to acquire cash flow income or prefer to earn cash quickly by risking a property flip.
One of the easiest and low risk way to make cash with in this business is by becoming a Real Estate Bird Dog. You simply find a property for an investor, put it under contract and sell it to the real estate investor without ever touching the property. This is easier said than done but you can potentially make 1k - 2k per deal.
Author: Dave J.
The first step of the Real Estate Investing Process is to determine your goal. This is a much over-looked critical first step along the path of success. Many rookie real estate investors begin their journey by determining what strategy or technique that they want to use before even formalizing their goal for what they are trying to accomplish. Ask yourself the following, What is my goal?
Is it to:
1. Profit from Cash Flow
2. Generate Quick Cash
3. Shelter Cash from Taxes
4. Diversify Assets
5. Build Toward Retirement
Depending on your goal, your next step is to choose a strategy. The strategy you choose will depend on your time-line and on your qualifications. For example, if you desire to acquire one rental property a year for the next 20 years in hopes of retiring and living off of the cash-flow, then you will need a slow, predictable, and safe methodology for finding properties, acquiring properties, and managing properties. You will also need cash for reserves, a down-payment, and maintenance.
However, if your goal is develop quick cash to facilitate larger purchases or to finance rehabs, then you may want to investigate and pursue wholesaling real estate. In which case, you won’t need any qualifications except for hustle, hard work, and perseverance. The following is a list of a few strategies used in the Real Estate Investing Process:
1. Foreclosures
2. Buy and Hold Single Family Homes
3. Multi-Family and Apartment Buildings
4. Commercial Real Estate
5. Wholesaling
This is not an inclusive list. There are many more strategies that can be pursued as part of the real estate investing process. The market conditions present throughout the majority of the United States are revealing opportunity on virtually every street in almost every city. Many real estate experts agree that the next two years will remain as the best opportunity to buy real estate at premium prices since the Great Depression.
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