Buying and selling property is a popular way to make money. In the past, investing in properties for house flipping was the hot ticket. Today, more investors are leaning toward real estate notes and land contracts and houses that can be used as rent-to-own properties.
Other kinds of property that can generate positive cash flow include real estate and personal belongings held in probate. Whenever a person passes away without writing a Will all their belongings are suspended in probate court until estate settlement procedures are completed.
Sometimes estate assets have to be auctioned to payoff outstanding debts. Probate property is often sold for much less than its appraised value. Better yet, not many people are familiar with buying estate assets so there isn't as much competition.
Acquiring probate property involves spending time at courthouses to review estate cases and find out about upcoming auctions. Sometimes estate assets are sold through public auctions. Other times, assets are sold directly through estate agents.
Investors that don't want to snoop around court records might prefer buying bank owned property. These houses consist of homes repossessed by foreclosure or deed in lieu. When banks foreclose on real estate the properties are listed for sale through foreclosure auctions.
When houses don't sell at auction they are returned to the bank. At this point they are listed by realtors and generally priced below market value to spur quick sale. Investors might end up paying more than the asking price if multiple buyers are interested in the property.
A good source for buying bank owned real estate is Fannie Mae Homepath. Although this program is primarily for helping individuals acquire affordable housing, it is also open to investors. The only stipulation is investors have to wait until Fannie Mae homes have been listed for 15 days before they can submit a purchase offer.
One reason Fannie Mae Homepath properties are enticing to investors is many of them qualify for HUD's Neighborhood Stabilization Program. NSP grants are offered to rehab properties that are positioned in communities plagued by foreclosure.
Another benefit of Homepath houses is investors can apply for financing using Home Path Mortgage. This program includes special offers and has low down payment requirements to help investors have better control over their cash flow.
Fannie Mae properties are ideal for use as rental homes. A perfect scenario would be to combine NSP grants with Home Path Mortgage and offer properties for sale using seller carry back trust deeds or lease purchase option agreements.
Many homeowners that have fallen prey to foreclosure desire to buy affordable housing, but don't qualify for bank financing. Providing owner will carry financing or letting them rent to own provides consistent cash flow and lets investors obtain a better return on investment than house flipping.
Investing in real estate notes and land contracts can be a profitable venture as long as due diligence is conducted. It's not unusual for investors to sell off seller carry back mortgages and lease purchase options so they can free up funds to buy more properties.
Other options include investing in promissory notes, land contracts, and mortgage notes. These kinds of notes can be sold in full or partially. Sellers generally require lump sum cash and are willing to sell notes below face value.
These are just a few ways to generate income from investment property. Discover more investment strategies and learn about the different kinds of properties and financing options in our real estate investing article library.