Category: Real Estate

Real Estate Investing Tips for Profit

Investing in real estate has long been considered as a safe and high return investment. “Flipping” in real estate investing has become very popular over the last few years especially among the speculative real estate investors. Flipping refers to the buying and selling of real estate property within a short period for quick profits. Though the return on investment appears to be good, there is still a risk that your money could get locked-in in the absence of buyers. Real estate prices have steadily increased since the beginning of this decade. However many signs point to the real estate boom coming to an end, so it may be wise to put real estate investing on hold. Investing in real estate, contrary to popular thinking, is a slow yielding investment. Hence real estate investors need to do proper planning and to conduct market analyses before investing.

Before investing in any property it is vital to study all the related documents of the property, to see the license of a broker if any, to check for liabilities etc. All contracts have to be in writing. All details such as the names of all parties, address of the property, area, purchase price, consideration etc. have to be entered in the contract along with all parties’ signatures. It is also prudent to hire a property lawyer to look into the intricacies of real estate contracts.One good way of investing in real estate is to buy foreclosure properties. Foreclosure is the process in which a bank or a creditor sells the property of the homeowner to recover the loan, which the owner has not been able to pay back.

A lease to purchase contract is considered the best type of real estate investing. This type of contract basically allows the tenant to lease a particular property for some period, and at the end of the period he has the option of purchasing the property at an amount decided at the signing of the contract. The tenant pays an initial non-refundable deposit. If the value of the property goes up at the end of the leasing period, the he may want to buy the property at its original value. If the value has not increased he can opt not to buy it. During this period he can also rent the property to someone else. By this method, the investor takes a lot of the risk off himself as he does not have to commit a large sum of investment capital not apply for a big loan.

Real Estate Investing: Forward Planning

If you are ready to put in all that it takes, nobody can stop you from riding the ladder of success in the real estate industry. If you are new to this field but have the requisite enthusiasm and energy, the following start-up tips are just right for you. Again, even if you are an experienced r/e investor, you cannot just afford to miss these start-up tips, as they can give your real estate career a much-needed fillip.

Join a Local Real Estate Association

When it comes to real estate investing, the best thing that you can do first is to join a local real estate association. This way, you can surround yourself with like-minded people. First, try to find a group. If you do not happen to find one according to your liking and experience, make a group by yourself. But, make sure that all the members of your group meet at least once a week.

Work In a Team

You must understand that r/e investing requires teamwork. Therefore, before you begin your serious property searching, you must have your real estate team in place. Some of the top members of your real estate team may include Real Estate Agent, Title or Escrow Company, Attorney, Mortgage broker, Contractors, Mentor, Partner etc. Other members of your real estate team may include loan officer, real estate insurance agent, tax advisor, lawyer, and so on.

Think Small in the Beginning

Do not try to start your r/e investing career with big deals. Think small. Go for smaller deals, get experience, and as you grow up, start investing in bigger deals. The reason is that the responsibilities of a landlord are easy to understand. Again, the initial capital you require for a small residential property is very low. Once, you master the nitty-gritty of small residential r/e investing, you may then go on to seriously consider investing in larger residential apartment buildings and other commercial properties.

Real Estate Investing: The Three Levels of Success

If you have been investing in real estate for any length of time, then you have undoubtedly faced frustration, hit some highs and then crashed into some lows! Ultimately, your goal as a real estate investor is most likely to generate immediate cash flow and long term wealth and increased net worth. True financial success is achieved by combining these two elements – cash flow and wealth creation, or net worth. Cash flow is considered as the monetary profit that is earned every month to support your lifestyle. This can also be used to invest in assets that may later appreciate in value.

Three levels of real estate investors are as follows:

Level one Investors – In this level, the investors learn the basic tricks of the real estate investment business, and they use it to make real estate investment a profitable venture. They learn this by making their initial deals profitable. Thus, Level One investors ensure that real estate is the path to economic success. They are aware that there is much to learn from this vast field, and they try to understand it. Real estate investors at this stage should spend time learning the business, evaluating the details of the deals, and make sound decisions. Often times, this will involve some level of training or coaching to ensure success. There are two main reasons why investors fail at this level: (1) Fear and (2) Lack of Knowledge. Because of this, education is critical at this level.

Level Two Investors – At this level, investors master the five core real estate business skills and also maintain a real estate portfolio. Second level Investors are those investors who generate a monthly cash flow ranging anywhere from $5000 to $60,000 per month (depending on location, market conditions, etc.), and also add an average of $250,000 to their net worth per year. Some investors have a wrong notion that after reaching the second level they have achieved it all. They do not realize that there is so much to achieve down the investment line, and that the benefits are worth their exertion. The biggest pitfall that investors at this level tend to fall into is that they get “comfortable”.

Level Three Investors – Level III real estate investors build a small fortune in such a way that they earn the majority of their income through passive methods. At this level, investors are generally not working in the day to day grind of the business. They’re not out meeting with sellers night after night, sitting at open houses on Sundays, etc. They have effectively learned to make their money work for them and are using their assets to acquire other assets. For example, instead of rehabbing houses at this stage, level III investors may lend hard money to Level I and Level II investors!