Real estate has long been heralded as one of the best ways for investors to make good money, but it isn’t as easy as it so often appears. Despite how simplified reality TV shows like “Flip This House” make real estate investments seem, many investors who thought home buying and selling would be a smooth and simple process quickly discovered that investing in real estate is incredibly strategic and tricky.
Whether you’ve tried your hand at real estate investing before or are merely interested and are looking at how you can improve your current financial situation, I have a few smart tips to help you get started on the right foot with your investment, starting with:
Purchase from Private Owners
This will take a lot of diligence on your part, and you may need to try and foster some inside connections with those who keep even closer tabs on the local real estate scene. Buyers benefit from purchasing from private owners because:
- There’s less competition (i.e. You’re far less likely to become embroiled in a bidding war that will lead to an increase in the price of the property)
- Sellers are often facing foreclosure or are looking to make a “quick sale” for other reasons
- Many of the least expensive yet best properties are those being sold by private owners who are tired landlords looking for a quick easy sale.
Here is a picture I took at closing of a couple I had their house under contract and sold my contract for a $25,000 assignment fee. They were very happy at closing.
They were tired of being landlords. After closing the husband called me and wished me much success in my business.
The Location of the Property
Something has to be said for the location of the property. More often than not, investors who are in real estate for the long haul, earn a significant pay out later on down the line due to an increase in their property’s value. Though there is no guarantee that your home will enjoy an increase in property value, you can look back at the history of real estate sales in the area you’re interested in to get a good idea of how property has been valued in the past.
TIP: Savvy real estate investors will purchase properties when the rate of inflation is suspected to exceed the nation’s current long-term debt rate because the “dollar” that they use then to purchase property is worth less in the future.
Managing a Property
If the property you’ve purchased is intended to be your forever home, then read no further. But if you’re looking to make more money from your real estate investment, there are a number of options available to you:
- Become a landlord: If the game of Monopoly has taught us anything, it’s that collecting rental payments from tenants is a great way to make some cash.
- Become a “leasee”: You don’t even need to buy a property with this option! When you rent a property with a lease option, you can gain control over a property without actually becoming the owner of it – meaning you never have to spend your hard earned dollars to fix or maintain it but collect the rental checks
- Buy and flip: Much like the reality show mentioned in the first paragraph, if you can get a house for cheap and fix it up for even less, you can re-sell it at a huge profit