While there are many types of realestate investment opportunities, most are categorized as either residential or commercial. Residential real estate comprises the majority of investment opportunities. Commercial real estate can provide a greater return on investment in a shorter period of time. Both categories have pros and cons and neither are without risk.
Realestate investing can be a highly profitable and rewarding career or hobby. But, before taking the plunge it is important to thoroughly understand the process involved; particularly in today's volatile market.
There are two primary methods to make money through real estate investing. The most common is to purchase properties directly. This can be done with cash, obtaining financing, or with a group of investors. With today's credit crunch lenders are hesitant to loan funds, making it more difficult to participate in the real estate investing game.
The second way to make money in realestate is by investing in financial instruments. These include real estate investment trusts (REIT), or the purchase of stocks offered by housing developers.
Residential real estate includes single dwelling homes, duplexes and condos. Many of these properties can be purchased through foreclosure auctions or banks. When foreclosure properties are returned to the bank they become real estate owned (REO).
REO properties are occasionally sold under market value; but, in most cases banks attempt to sell them at or above market value to avoid losing money. Experts suggest working with a Realtor who specializes in distressed properties. Doing so can reduce the amount of time sifting through thousands of foreclosure and bank owned properties.
Investing in probate real estate can yield a substantial return on investment. Probate real estate is property owned by someone who has passed away. All their assets and personal belongings are held in probate while the court takes inventory, pays outstanding bills, and makes certain assets are distributed according to the decedent's Will and probate laws.
If the decedent has a mortgage, the estate must continue making payments toward the note. If the estate does not have enough money to pay the loan, the lender can initiate foreclosure proceedings. A judge can order the estate to sell the property, or heirs can petition the probate court to obtain permission to sell.
Oftentimes, heirs will sell probate real estate far below market value. Additionally, probate real estate is usually in good condition and does not require extensive repairs like foreclosure and REO properties. Investing in probate properties can offer a win-win solution to heirs and investors.
Commercial real estate encompasses apartment buildings, office complexes, retail stores, shopping malls and restaurants. Investing in commercial real estate requires a different set of skills and knowledge than residential real estate.
Investing in vacant land offers a potential for lucrative return on investment. Land can be used for a variety of purposes including farming, ranching and office or housing development. Experts suggest investing in rapidly growing areas, or those expected to grow within 2 to 5 years.
These are just a few ways to make money through realestate investing. We invite you to learn more in our realestate article directory; filled with hundreds of informative topics.
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