Top 10 Real Estate Investment Strategies
Best-selling books and seminars offer advice on how to make millions through real estate investment. There are also countless websites, podcasts, and even old-fashioned radio programs that offer new investors guidance and information on how to enter the real estate market and make a profit. If you cull down all those various forms of advice, you will find a few simple strategies are at the core. Some are designed for the long-term investor while others are designed to provide an immediate profit or to create an alternative income stream rather than a future sale.
Here then, are the top ten strategies.
This is still a popular form of investment, especially when combined with some of the other strategies, such as foreclosures and judgment purchases. It boils down to buying a house or condo or office that is slightly — or completely — rundown at as cheap a price as possible, fixing or upgrading the property, and then selling it at a profit that takes into account not only the original purchase price, but the investment in rehabilitating or improving the property.
Foreclosures are still a popular investment in many markets, depending on the backlog of properties in a given city or area. With property values rising over the next few years, a home that was purchased through foreclosure will likely be more valuable in just a year or so, making a tidy profit for the savvy investor.
3. Judgment Purchases
This strategy is a little more complicated. It requires the purchase of liens or court judgments that are held by a plaintiff against a debtor. While it is possible to buy a lien, and therefore a property, for pennies on the dollar, there is a lengthy legal process of locating liens and filing the appropriate paperwork through the court system.
4. Builder Auctions
When the housing market crashed in 2008, many builders were left with unsold properties as developments were abandoned. This actually happens all the time; the market crash just increased the number of abandoned properties. To try to recoup their losses, many builders are holding auctions to sell off the empty homes and offices. With careful research of local markets and careful bidding strategies, it is possible to make a profit when combining this type of purchase with other strategies.
5. Long-term Holding
Traditionally, this was the most common form of investment. Individuals, families, and companies purchase a piece of land or a building and hold on to it for years or decades, before selling it for a profit. In some cases this land just sits unused until some developer wants it. In others, the owners may rent out a home, lease office space, or live in the property themselves until they are ready to sell.
6. Lease Optioning
Another complicated strategy involving a contract for lease option. The buyer leases the option to buy the property in the future. They then improve the property and sell the option at a profit to a new buyer. This is risky strategy that requires careful research of market trends and legal requirements.
The simple act of purchasing a property and renting it out to make a regular income. For this to work, the local market has to allow for rents that are higher than all the costs involved in purchasing and maintaining the property.
Purchasing property with the assumption that its value will increase significantly in a short period of time.
Purchasing land, abandoned property, or neglected structures with the plan of developing something new, such as apartment buildings, office structures, warehouses, or retail complexes.
10. Investment Groups
Rather than investing on your own, buy into or form an investment group with other individuals or entities. With a larger pool of capital it is possible to invest in larger projects and hire professionals to handle the day-to-day management and logistics.
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