Real Estate Investing Strategies
Many real estate investing strategies are available, but in today's market investors must be considerably more cautious of where they spend their money. The goal of investing in anything is to generate a good return on investment. While there are times when taking a gamble pays off, now is not the time to gamble with real estate.
It's best to stick to real estate investing strategies which have weathered the storm and incorporate a few new strategies which have popped up as a result of economic conditions. It's also important to realize that investing in real estate is rarely the way to get rich quick. Instead, investors should develop short-and long-term goals and diversify investment properties.
Most real estate investors start out with residential properties. In the past, flipping houses was one of the more popular investment strategies. While there may still be a little money to be made in house flipping, it is not nearly as prevalent as 3 to 4 years ago. Instead, investors are purchasing foreclosure homes and short sale properties.
There are two ways to buy foreclosure homes. The most common is to bid on properties for sale through a public foreclosure auction. The second is to buy foreclosed real estate directly from banks.
Investors who have never purchased real estate through foreclosure auction should consider attending an auction or two to observe the process involved. It is also smart to research techniques for buying auction foreclosures, along with researching auctioneers offering properties.
Some auction companies charge attendees a fee. Others require attendees to pre-register for events. Most require payment in full within 24 hours. Understanding the process involved will eliminate the confusion and allow investors to focus on available properties and bidding processes.
Buying foreclosure homes from banks can be a bit more complicated than buying houses through real estate agents. When foreclosure real estate is returned to banks they embark in strategies to remove liens, judgments, or evicted property owners. This can be a huge time-saver compared to buying houses through foreclosure auction, but will result in a higher price tag.
Bank owned property is sold through each lender's loss mitigation department. Most banks work with local realtors to list and show bank owned homes. The process of buying foreclosure real estate through banks typically takes 3 to 4 months to complete the sale.
One real estate investing strategy that is quickly moving to the forefront is buying houses for use as rental homes than offering a lease purchase option agreement. The target market for this type of investment strategy is foreclosed homeowners.
Once a person has lost their home to foreclosure they normally cannot qualify for a mortgage loan for at least 2 to 3 years. It can be quite difficult to transition from being a homeowner to a tenant. Investors who offer rent-to-own options or other types of owner will carry financing can generate positive cash flow on rental properties and retain long-term tenants who pay their rent on time because they are working toward rebuilding their credit so they can qualify for bank financing when the owner-financed contract expires.
These are some of the more common real estate investing strategies being used in today's market. We offer additional investing strategies such as seller carry back mortgages, Subject To, and contract for deed in our real estate investing article library.
As a California real estate investor, I have witnessed numerous changes within the industry and am certain there are more to come. In order to succeed in this downturned market, investors must be flexible and ready to change gears when incorporating real estate investing strategies.