5 Rock-Solid Real Estate Investment Strategies By: Peter Dobler |
Investing in real estate is more complex than simply buying and selling homes. |
To help new real estate investors to decide which strategy might work for them I put together 5 rock-solid strategies. It is up to you which strategy you feel more comfortable with. 1. Buy and Hold This real estate investment strategy is commonly known as rental properties. Becoming a landlord is easier than you think. You buy a property, you advertise it as “for rent” Screening your prospect tenants is your first line of defense. Protecting your property from damage is your first duty. I might paint a little bit dark picture of being a landlord. But dealing with tenants can be the most frustrating job you ever had. Do yourself a favor and visit a bookstore or library and get as many books on landlording as you can get. Armed with this knowledge you will be able to create a positive cash flow and a long term relationship with your tenants every time you put the “For Rent” sign in the yard. With the buy and hold strategy you basically have 3 income streams going at once. Amortization; while paying your mortgage you also lower the amount you owe. Appreciation; while owning the property it increases in value. Tax incentive; as a landlord you will be able to deduct your investment cost over several years. (See you tax advisor for professional advice). Based on this information you can easily see that even if the rent doesn’t cover 100 % of your mortgage payment you will still be able to create a positive cash flow. 2. Flipping This is the art of “buying” and “selling” real estate investment without actually taking ownership. In a flip situation real estate contracts get assigned and the person who assigns the contract to someone else typically gets a commission for their services. That’s how you can make money with real estate without credit checks or no money down. Because you never take possession of the property, you don’t need to apply for a mortgage. You only need 2 things to be able to flip a home. First, you need to find an attractive property that will sell very quickly. Second, you need to find a buyer within a very short period of time. Typically 2-3 weeks. Then you simply flip the contract to the new buyer and you will collect your commission at a so called “double closing”. This sounds complicated at first, but with a little bit practice you will be able to create a nice income from this. By the way, this is the preferred concept of most real estate “gurus” who appear in late night infomercials.
3. Rehabs Rehabs are the most risky form of real estate investments. You either didn’t get the property cheap enough to make a profit or the damages are more extensive than estimated which will offset the cheap purchase price. To make matters worst. If during the rehab phase of typically 3-4 months the market is going south all bets are off. Trust me, I made my share of experiences with this and I told myself, never again. 4. Commercial Real Estate Investment What comes to your mind first when you think of commercial real estate investment? Big factory complexes, shopping malls or maybe huge office buildings. Well, my answer is much simpler. Anything bigger than a 4 unit apartment building, some call it fourplex, is considered commercial. Theoretically there’s no such thing as sellers or buyers market for commercial real estate. I wrote a complete article about the pros and cons of commercial real estate. 5. New Construction This is the most affordable and easiest way of real estate investment. Getting into the earliest phase possible of a new development is a sure thing to make money. Keep an eye on the market and you will be able to sell your new home before construction is finished. The construction companies don’t like this, so they limit the number of homes an individual can buy. Even so, keep one or two homes constantly under construction and you will make some nice profits. Of course this works only in a sellers market. About the Author: Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner. |
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