The Three Techniques You Need to Master in Real Estate Investing

The Three Techniques You Need to Master in Real Estate Investing- 150x150Many industries have suffered due to the recent economic recession and are currently slowly recovering. One of these industries is real estate, which is not as profitable as it once was, but remains an attractive industry for investors. Real estate, like many other industries, has recently started to show improvement, and it looks like it will keep improving over the next years.

For someone with less experience and knowledge, real estate may seem like a pretty difficult industry to invest in, especially during these times. Fortunately, by learning a few techniques, any investor who possesses the right determination can make it in this business. In this article you will find the three main techniques that you need to master in real estate investing.

Technique Number 1: Find Rent-to-Own Homes for Home Buyers

A good alternative for people who are unable to get approved for a mortgage loan is the lease purchase. This gives the tenant the option of buying the home that he is renting, but at a later date.

A fairly large number of potential home buyers are unable to obtain a mortgage loan, due to loan requirements becoming stricter. This has created a large number of people and families who are renting because they have no other choice. Lease purchase gives them the option of purchasing the rental before the lease term is up, and even the possibility of allowing part of each rent payment to go towards the purchase price. This is a great opportunity for those who are unable to get mortgage financing, and for the real estate investor.

Because of the housing market being in recovery, you have a significant number of homes that won’t sell because sellers won’t budge on the price. Additionally, there are a significant number of people looking to buy, but can’t qualify for loans. In order to make a profit, you must find a seller willing to agree to a lease purchase option, and then find him a tenant buyer. Bringing the two together will resolve both their problems and get you a nice commission. Because both the seller and the buyer are motivated to move quickly, the transaction shouldn’t take more than a few weeks to finish.

Technique Number 2: Investing in Foreclosures

You could make huge profits from investing in foreclosures, but if you don’t have the proper knowledge, a single bad investment can wipe out all of your capital, along with ambition to invest in real estate.

There are three ways in which you can buy homes in foreclosure: pre-foreclosure, at the auction, or buying from the lender after the foreclosure. Buying a foreclosed property from the lender after the auction is referred to as buying REOs (real estate owned), and it’s the less risky option of the three. The next riskiest time to purchase a property is pre-foreclosure, because the home can have many issues that the seller didn’t disclose. The riskiest purchase is buying a foreclosed property at the auction. You won’t receive any warranty or guarantees that the home is free of any outstanding liens or loans.

The best way to buy a foreclosed property is to find a good REO agent that has the necessary experience to make sure that the transaction goes smoothly and you get a good deal. Sometimes, real estate agents who are specialized in REOs have a few foreclosure listings that need to be sold fast, so they will be searching for an investor who can make the purchase quickly. If you have good relationships with a real estate agent, the first person he calls could be you, helping you secure a good deal in a short time.

Technique Number 3 – Buying Short Sale Properties

Many home owners who have found themselves underwater on mortgage loans might require a short sale. This is a great opportunity for the real estate investor to make some serious profit.

You can negotiate a good price with the homeowner or with the short sale lender, buy the home, and then flip it for a profit. Like in the case of foreclosure investing, finding a good real estate agent can make a huge difference. The agent can locate properties for you, help you with your investment plan, and help you negotiate a better price.

These three real estate investing techniques can make you very successful if you use them wisely. You must remember that not all properties that seem like a good deal are worth investing in. Familiarize yourself with these techniques, with the investing process, and don’t be afraid to consult a real estate agent. Even if you have done your homework, agents have the necessary relationships to help you find great deals faster than other investors, and get you one step closer to becoming a great real estate investor.

The Power of Networking in Real Estate Investment

The Power of Networking in Real Estate Investment- 150x150Question: When it comes to finding out about real estate investment deals quickly, do I just have to network with the right people or is this a “boys club” situation?

Answer: Networking is a powerful tool in virtually any profession, so networking will certainly be advantageous in anything involved with real estate.

It is true that two heads are better than one. One of Warren Buffet’s investment rules is that “if you are alone you will move fast, but if you are more than one you will go far”. Networking is very important in securing success in real estate business. Real estate business networks enable real estate investors to create new relationships and sustainable models for real estate growth.

Networking Opportunities

  • Property Community- This is an excellent resource that enables you to find and join various social groups where you can connect with and meet real estate investors to discuss property trends and other real industry related information on forums. You will also find property listings by types and regions. Property Community saves you money on advertising costs for listings and should increase the likelihood of a fast sale. Also, you can easily ask questions about real estate and receive answers freely throughout the forums. Another benefit lies in the ability to send private messages to group members if you need to discuss a more private matter, such as negotiating a real estate deal.
  • Meetup- This is one of the most popular forms of networking for both formal and informal groups. Meetup.com enables you to find out about any real estate meetings and networks close to where you live. You can also start your own meetup so that others can join. Some networks have over 1,000 members. Most meetups have networking events where you can meet great connections within the industry.
  •  Real Estate Webmasters- Real Estate Webmasters provides you with realtor forums where you can easily introduce yourself and then start chatting about investment prospects. Real Estate Webmasters has links for easily finding properties for sale as well as for finding buyers for your property. You can discuss your experiences with Google, Facebook, Yahoo and Bing and tips for how these can help others. By joining this forum, you will gain access to a wide network of investors and real estate experts. As an investor, you will learn more about link building techniques and other useful online practices. If you want to develop a new website for your property listings, you will be able to meet various real estate web designers with ample experience. There will be a wide variety of real estate and related professionals on the forums so you will be sure to make plenty of worthwhile connections.

Real Estate Investment Clubs

There are usually several different investment clubs in most moderately large to major cities. Some clubs are even formed at the national level and may have local chapters. For some, local clubs may be more beneficial because they will be more tailored to discussion and resources for your area. On the other hand, a real estate investment club at the national level may create more opportunities in different states that may not be easily accessed otherwise.

A real estate investment club enables you to create useful networks, gain investment expertise as well as tips about commercial and residential properties available for sale and purchase currently. These clubs will also help you familiarize with various rules and regulations related to real estate in your local area and nationally. You can ask and answer questions while connecting with like-minded real estate investors who share common goals.

Real Estate Conferences

Conferences are invaluable knowledge centers for real estate investors. By attending conferences, you will gain access to engaging discussions about the future of real estate business and acquire more of the expertise required to achieve success in the constantly changing real estate industry. There will be most likely be a variety of meetings and events going on simultaneously at the conference, giving you multiple chances to network, creating new friendships, business partners, and finding more real estate deals.

Many of your questions will be answered as many professionals from government departments concerned with land and property are typically present. Emphasis will be on current investment opportunities and  future trends in real estate.

The Power of Business Cards

A business card is one of the most powerful networking tools. A business card represents you and your company as a brand. It informs them about your niche within the industry, services you offer, your contact information, and leaves an impression on the person it is given to. Even if you don’t end up working with the person that received the card directly from you, they may pass along your card or your name to others that may end up working with you.

Many real estate investors have formed fruitful friendships by handing out their business cards. There are some cultures that consider receiving a business card a great honor. Designing high quality business cards can improve the image of your business and make a memorable impression.

Real Estate Get-Togethers

They might start as informal groups with a few real estate professionals that you know. Just look at a get together as an ordinary hang out with some buddies. You get to interact with fellow investors, share challenges, ask questions and help one another. These get-togethers may grow into larger groups or simply closer knit groups. You never know, from these you may develop some invaluable real estate investment partners. The group will keep each other updated on new developments in local investments and you’ll be the first to know inside information. This can also save you time and money on advertising if someone in your group leads you to a deal.

The informal nature of a real estate get together means that you don’t incur subscription costs or abide by rigorous rules. They are becoming more and more common because you get to do business with like-minded friends in a sociable manner.

There are so many opportunities for networking in the real estate industry. With all of this information, there’s no excuse for you to not join in! Reap the benefits of a strong and influential network of real estate professionals and see what incredible things happen just because of the people you know.

Pre-Screen Your Leads- It Makes a Huge Difference!

Pre-Screen Your Leads- It Makes a Huge Difference!- 150x150When investing in real estate, one of the most important rules that you should follow is that not all leads are deals. New investors may get excited when they start generating real estate leads as they’re starting out, but a seasoned investor knows that they will never have time to contact everyone, so a screening system has to be used. Some leads have the potential to make you a great deal of money, while others may turn out to be a waste of time, so this is another great reason to pre-screen your leads.

Time is money, so spending too much of it on leads that may turn out to not be good investment opportunities will limit your opportunity to earn big profits from investing in real estate. Even if your marketing is top-notch, and you get a significant amount of leads, it won’t be beneficial if you can’t distinguish leads that you should follow from leads that you shouldn’t.

How to Pre-Screen Your Leads

When you have your first talks with a potential seller, asking the right questions will help you determine if the deal is worth investing in or not, which will, in turn, save you a lot of headaches and money in the future. Here is a list of the info that you should try to acquire when pre-screening leads:

  • Find out why they’re selling. This bit of information won’t directly allow you to decide how profitable a deal is, but it can help you determine how ready the homeowner is to sell his property. Usually, homeowners who really want to sell their home will tell you the reason, while those who won’t, probably aren’t ready to sell.
  • Find out the asking price. Knowing how much a homeowner is expecting to make by selling their home can help you come up with an initial offer much more easily.
  • Find out how much the repairs will cost. You shouldn’t base your decision solely on what the seller tells you in regards to what repairs need to be done, but you can get a general idea. Of course, before buying a home, you should have a professional home inspector look at it to determine if it has any problems that will be expensive to repair.
  • Find out if there are any outstanding debts. Knowing if there are any unpaid loans in the property will help you better determine how much you should pay for the home and how good of a deal it is.

Pre-screening your leads will allow you to avoid making some big mistakes that will cost you money and time, or may even put you out of business. Real estate investing is one industry where you have to be really careful before spending money. Simple mistakes can turn into costly problems overnight, so always make sure that you closely verify all the leads before investing, no matter how appealing they may seem.

How to Invest in Real Estate without Much Money

How to Invest in Real Estate without Much Money- 150x150Investing in real estate costs money, but with a little resourcefulness and knowledge, you can buy real estate with little or even no money of your own. Having some quick cash to put down as a down payment is the ideal situation, but there are other options for real estate investors who don’t have much money. You have the traditional option of borrowing money, but we also tell you about some lesser known options that might work best for you. Here are your options when trying to invest without much money:

Options for Investing

1. Traditional Borrowing. Should you find yourself in the position of not having enough money to make a real estate investment, borrowing from a lender is always an option- just make sure that you will be able to pay the money back. Even though lenders have tightened their lending requirements, banks and credit unions are still able to lend you the money that you need for your investment if your credit score is good enough to qualify. You will most likely be asked to make a 10 percent or larger down payment, but there are still lenders that require less. Borrowing money from lenders is the safest and most well-known way of financing a real estate investment.

2. Seller Second. An often used form of financing, “seller second” can help you invest in a property by allowing the seller to provide a second mortgage. Normally, this second mortgage will be enough to cover most or even all of the down payment required. This type of financing allows you to buy an investment property without using much, if any, of your money, and the seller will get a large part of his equity. It is important to be sure that the mortgage loan that you qualify for allows a second mortgage to be added to it.

3. Seller Carry Back. This is a type of “creative financing” and it allows you to invest in a property with little or no money at all. Seller Carry Back is a form of financing in which the seller sells the property to the investor, but receives the money as monthly payments, for as long as 5 years after the sale. The seller must truly own their home, and not owe any money on mortgage loans.

4. Subject-To. This is another type of financing that can help the real estate investor if they don’t have enough funds. The name “subject-to” came from the phrase “subject to existing financing” which means that you are able to buy the home, but with the condition of the existing financing on the home will remain in the owner’s name, while the buyer will make the monthly mortgage payments. This type of financing gives you the advantage of not having to make a down payment because you will be able to refinance in six months and put the new loan in your name. Subject-to financing is only short-term because the seller is not going to be comfortable leaving the mortgage loan in his or her name for a long time.

5. Lease Option. Another popular way of investing in real estate with little money is by doing a lease option, which allows you to rent a home with the possibility of buying it down the road, before the lease term expires. During the period in which you are renting, which is typically two or three years, you will have plenty of time to get financing in order to purchase the home. The home owner will be unable to legally sell the property during the option period.

When investing in real estate without much money, it helps to be creative and resourceful. You shouldn’t let your lack of funds be an excuse to not invest in real estate. The solutions presented in this article show you that you can invest into this industry without having large amounts of money and liquid assets, but you have to make sure that you fully understand that these solutions might not always be a perfect fit for your situation.

Contractor Scams: How to Protect Yourself

Contractor Scams- How to Protect Yourself-150x150Because construction projects are a big business in the United States, it is no surprise that they have attracted all kinds of scammers and fraud artists. Every year, home remodeling fraud costs home owners all over the country thousands of dollars and a considerable amount of stress. The number of people who are being scammed daily is anyone’s guess, as many people don’t even report being scammed to the authorities. Whether you’re renovating your own home or you want to flip a house for an investment property, you could be a target for scamming.

Scammers are mostly preying on the elderly and singles, and simply disappear once they receive a deposit or do a poor job. The best and only defense against contractor scams is you. Before hiring a contractor, you should research them thoroughly and look at the company’s reputation, previous work, and feedback from other customers. If you want to start investing in property that requires a contractor’s help, know that it is often a long and involved process, so ask yourself before you get started if you want to invest in real estate. Here are some of the most important warning signs that should make you think twice before hiring someone:

Watch Out for These Warning Signs

1. Little or no identification. Contractors who are professional and care about their image have more than just their name on a van. Business cards and uniforms are a good sign that you are dealing with a professional, but these can easily be faked, so you will need to look further. Ask your contractor for his business address, business license and insurance certificates. Then run a check on all of them to make sure they are valid.

2. Soliciting. A common tactic of a scammer is to go door to door, telling home owners that they have some material left from a previous job and is willing to make some repairs on your house for cheap. They might also tell you that they have looked around and can suggest where your home needs repairs. Hiring one of these contractors will leave very little evidence to track them down if they turn out to be scammers.

3. Asking for money up front. Another type of contractor scam is to ask the home owner for up to 50 percent of the project price up front to buy supplies. Then, once you have paid the money, they either pack up and go, or do a poor job knowing that you won’t fire them, since you have already invested money in the project. A good way of protecting yourself from this scam is by never prepaying more than 10 percent of the project total.

4. Contract lacking all the details. When first talking to a contractor, they might agree to everything that you are asking for, but not include it in the written contract. Some contractors will tell you everything you want to hear just to get the job, but you must not just take their word for it, and ask to have all the details in writing on the contract.

5. Unforeseen problems. Blaming structural issues or damage, the contractor might inform you after the contract was signed that the price for the project will be much higher than what was agreed upon. The extra fees may be legitimate, but some contractors will look for jobs like this, where they can increase the price after the construction project has started. Hiring a professional home inspector before starting a major project is a great way of protecting yourself from both legitimate issues that may arise and scams. If you are investing in property, this should be done before you purchase the home so you don’t buy a home with extensive and expensive structural issues and damage unknowingly.

Any of these warning signs should influence you to think twice before hiring that contractor. The best way in which you can protect yourself from scams and fraud is by hiring only reputable contractors that can be thoroughly checked. A trustworthy professional contractor will not pressure you into signing anything, and work with you to determine exactly how much the remodeling project will cost. If you need a contractor for an investment property, be sure that the property has potential to make enough money after the contracted work is completed.

Avoid Making These Big Mistakes as a Short Sale Investor

Avoid Making these Big Mistakes as a Short Sale Investor- 150x150Investing in short sale properties can be a great way of making a profit in a fairly short amount of time. With the housing market slowly recovering after the big hit that it took during the recent recession, there are still plenty of homeowners who are underwater on their mortgage loan, and their best option is a short sale. Hundreds of thousands of homes are on short sale lists, giving real estate investors a great opportunity to make a significant amount of money.

Unfortunately, many of these short sale and foreclosed properties come with issues, which can cause expensive problems for some real estate investors, especially for the ones who are just starting. Damage that is undisclosed by the seller or undetected during the home inspection can end up costing you tens of thousands of dollars, putting an end to your career as a real estate investor before it even started. In this article, you can read about the biggest mistakes that a short sale investor can make.

Top 5 Biggest Mistakes

Mistake #1 – Being in a Hurry to Make Some Quick Cash

Theoretically, investing in short sales is a pretty fast way of making money, but it is an investment, after all and, like most investments, it requires patience and preparation. Rushing into an investment and expecting to quickly make some cash can lead you into making some serious and costly mistakes. As a short sale investor, you should hope for the best, but be prepared for the worst, meaning that you do your homework beforehand and are able to efficiently take care of any problems that may come up.

Mistake #2 – Not Keeping Your Options Open

Not every short sale will go through, so, even if you think you have found the perfect deal, keep your options open, as a better deal could be just around the corner. With such a large inventory of foreclosed and distressed homes, focusing all of your energy and money on a single property is not the most profitable move.

Mistake #3 – Not Following Short Sale Deadlines

The short sale process follows some pretty strict deadlines, so not being able to follow them can result in you losing that deal. Make sure that you have everything ready in time, from paperwork to scheduling the home inspection. Starting all of the necessary proceedings early, such as the loan pre-approval or home inspections, makes it easier for you to follow short sale deadlines and deal with delays.

Mistake #4 – Not Doing a Home Inspection

The few hundred dollars that you have to spend on a professional home inspection are not worth the thousands that you will have to spend later if the house has serious damage. Simply because the outside of the house looks good doesn’t mean that it is in a good shape. Unseen problems like roof or foundation damage can be very costly to repair, and possibly leave you with no profit at all. Pay close attention to all of the details and get a comprehensive insurance policy from the home inspector.

Mistake #5 – Paying too Much

Short sale investing is normally a sure way of buying a home cheaper, but that’s not always the case. A mistake, like overpaying when investing in real estate, can put you out of business or end up being just a waste of your time, in the best case scenario. Do your homework before investing your money and find out how much similar properties have sold for in the area in the past few months.

Real estate short sale investing is a good way of making a profit for a knowledgeable investor, who takes the time to research not only the whole real estate investing process, but also the properties that he or she is investing in. It is hard to recover from mistakes in this business, so make sure that you don’t end up having to look for another job or even worse, broke, because you haven’t paid attention to all of the details that short sale investing involves.

Investing in Distressed Property and Foreclosures? Here’s Advice from the Experts

Distressed Property and Foreclosures- Expert Advice in Investing-150x150Foreclosed and distressed properties are a good real estate investment because their price is usually significantly below market value. When the owner of such a property defaults on their mortgage payments, the property goes into foreclosure and the bank or debt collector starts the selling process in order to collect the mortgage payment.

One third of all the homes sold between 2008 and 2011 were foreclosed and distressed. These properties are listed for prices 40-60% off their initial market value, and are a good deal for real estate investors. However, the possibility of making a profit with these properties will attract a lot of investors, so you will most likely have to win a bidding war before you can purchase a distressed or foreclosed property. Another issue that you may encounter is that foreclosed and distressed properties will usually need to be repaired before they are resold. Here are the top 10 tips for investing in distressed and foreclosed properties.

Top 10 Tips

1. Get pre-qualified for a loan. Unless you have enough cash to buy a property, you will need to take out a loan. Lenders will only consider serious offers, and you might not be able to bid on a property if you are not pre-qualified for a loan. However, if the home is too damaged, lenders might refuse to give you the loan, which means that you will have to take out another loan for repairs, or invest some of your own cash.

2. Research the area. Buying a nice home in a bad neighborhood is not a great idea. If the surrounding properties are in bad shape, they will most likely drive down the value of your investment. On the other hand, buying a damaged home in an upscale neighborhood will bring up the value of your investment. Renovating the home will also increase its value.

3. Have a professional home inspection. Foreclosed and distressed homes are sold “as-is”, making a professional home inspection a very important part of buying a property. Once the sale contract is signed, you will be responsible for any damage that the home might have. Besides giving you a clear picture of what shape the home is in, the professional inspection will also give you an estimate of how much it will cost you to renovate.

4. Be ready to make some repairs. Many times, when previous owners are evicted, they do intentional damage to the property. After the housing market crashed a few years ago, many people left their homes in a deplorable state, while others even stole kitchen appliances or light fixtures. Another thing that can happen to a home if the previous owners have been evicted is that it can become an easy target for vandalism.

5. Advertise. In order to find good deals on properties that are facing foreclosure, you need to advertise to their owners. A good idea would be to use bandit signs in areas with a high foreclosure rate. Another thing you can do is post classified ads in local newspapers, or on local websites. This way, you will find desperate sellers, and not be restricted to bidding on properties that your competition will also be bidding on.

6. Buy from people who are forced to sell. Buying from a seller who is only thinking of selling won’t guarantee a good deal. But buying from someone who is forced to sell because they are facing foreclosure or have other issues will most likely get you a good price.

7. Be careful when making estimates. Especially if you plan on remodeling or renovating a home before reselling it, be very careful when estimating how much money you will have to invest in the repairs and improvements. A small mistake when estimating these costs can become very expensive for you, and you might end up with a home that is hard to sell.

8. Contact lenders directly. Not every foreclosed or distressed property will be listed publicly, and some may be outdated. By contacting lenders directly and finding out if there are any foreclosed homes in the area, you could even find properties that are not yet listed, which gives you the advantage of being the first one to negotiate their price.

9. Make serious offers. While lenders and owners are in a position where they want to sell the distressed property as quickly as possible, making an offer that is too low won’t work. The home’s price will most likely be based on other sales for similar properties in the same area, so researching other sales should give you a good idea of how much you should offer.

10. Know the law. Many states have laws regarding foreclosure, made to help the home owner. In some states it takes up to 12 months for the foreclosure process to end, so make sure you know the laws before you make a purchase and find that you have to wait months before actually getting possession of the property.

When investing in foreclosed and distressed properties it is important to act fast, know what you want and, most importantly, have knowledge of the foreclosure process. Arming yourself with these top 10 tips will increase your chances of making a good investment, whether you are just starting out or you are a seasoned investor.

Don’t Fall for These Homes: Deal Breakers You Need to Know

Don’t Fall for These Homes- Deal Breakers You Need to Know- 150x150When looking for a home, it’s easy to fall in love with certain aspects of a house and totally disregard others. Whether it’s the neighborhood that the house is located in, the neighbors, or the curb appeal, you should take a step back and start looking at the whole picture. The issues that you might have missed will almost definitely give you big headaches in the future, and  if possible, they might be expensive to fix.

A house that may seem like it’s in great shape could be hiding some major damage and/or structure issues that will cost you an arm and a leg, while a house that doesn’t make such a great first impression could be easily and cheaply fixed to your liking, saving you big money in the long run. Here are some of the most important deal breakers that you should be aware of.

Important Deal Breakers

1. The location. Your new house will probably be your home for a long time, so its location should be one of the most important factors that will influence your home buying decision. Houses that are in close proximity to interstates, busy intersections, or train tracks might not be such a good choice if you don’t want to deal with a lot of noise and traffic. Also, one of the main considerations when buying a house is the neighborhood that it is in. An out of shape house located in a nice neighborhood could have a greater value than a good looking house located in a bad neighborhood.

2. The foundation. Foundation damage is not only one of the most expensive issues that the house can have, but it can also cause other damage to your home unsuspectingly. The house’s plumbing and walls can be affected by a cracked foundation, meaning that the repair bill will be in the tens of thousands of dollars. Even if the foundation was fixed, make sure that the work is covered by a warranty, preferably a lifetime warranty.

3. The roof. Changing, and even repairing, the roof of a house is a very expensive operation. Pay close attention to what shape the roof is in and, if the seller doesn’t agree to pay for its repair, it would probably be better to keep looking. Of course, this all relates to the cost of the house. The house may be listed for cheaper than other similar houses because its roof needs replacing. The biggest problem when buying a house with a damaged roof is that, when the first heavy rain comes, you might find yourself having to repair more than just the roof.

4. The plumbing and wiring. Two other parts of a house that can be very expensive to repair or replace are the electrical wiring and the plumbing. Re-wiring and re-plumbing a house involves opening up walls, digging, and usually quite a bit of time. Faulty electrical wiring can cause fires and bad plumbing can cause floods, so they are both problems that need dealing with before they put your life in danger.

5. Schools. If you have children, or plan on having them in the future, your home’s proximity to schools will be important. More important than that, though, is what school district your house is in. The quality of education, as well as the distance, both matter when you have kids. If the school is too far from your house, you will have to spend significant time driving your kids to and from school, or they will have to spend a lot of time on the bus.

6. Termites or pests. Probably unseen when you first visit the house, termite and pest problems can also be a deal breaker. Hiring someone who can thoroughly search the house for any of these problems is a great idea. Even if the seller has gotten rid of termites, they can still come back if prevention methods were not used, so make sure you inquire about what methods that prevent the reappearance of termites were used and when.

When buying a house, try to look at the big picture. The location is very important, as you will probably live there for many years to come, but you shouldn’t ignore the house’s existing damage just because you think you have found exactly what you were looking for. Even small damage to the roof or foundation can become a big and expensive problem in the future, so finding them before you buy the house is of utmost importance. A few hundred dollars spent on a professional home inspection can save you a fortune in the future.

10 Steps from the Pros for Purchasing Investment Property

10 Steps from the Pros for Purchasing Investment Property- 150x150Many first time real estate investors don’t know where to start, and end up making costly mistakes. Investing in real estate, like investing in most industries, is a lot easier if you have a clear understanding of the process and what steps you need to take in order to succeed. Purchasing investment property is different from buying a home for yourself, so you will have to put the needs of the future tenants or home buyers before your needs.

10 Steps for Success

When it comes to purchasing a property, it’s always good to have a plan. Now that you are investing in a property, you want to make sure that you will make a nice profit, so having a plan becomes even more important. Here are 10 steps that you should follow in order to become a successful real estate investor:

1. Set goals. Determine why you are investing, how much money you want to make, and write this down. Whether you are saving for retirement, your children’s college funds, or you just want to make money, setting goals will help you stay on track. Having a clear set of goals will prevent you from making impulsive decisions that can turn a seemingly good investment into a nightmare. Discussing the investment with your family is also a good idea, as these investment choices will affect them as well.

2. Review your finances and budget. Thorough review of your bank account is required in order to succeed in real estate. Consult a financial advisor to find out exactly how your financial situation will be affected by your property investment, the costs, and profit. Always overestimate repair costs, so you won’t have any unpleasant and expensive surprises in the future.

3. Hire a good real estate agent. Even after doing significant research, you will hardly be an expert in real estate investment, so hiring a professional will benefit you greatly. Real estate agents who focus on investment property should have all of the market information and contacts that you need to find good deals, even before they are listed on the market.

4. Research the market. You might know everything about the housing market in your area, but that doesn’t mean you will find a good deal there. Extending your search to other areas of the state or even the country can result in finding some great bargains. Your real estate agent can be of great help with this, and put you in contact with his colleagues all over the country.

5. Research the rental market. If you are investing in a rental property, start looking at what other homes are being rented for. Again, your real estate agent can provide this information, but you can also find out rental prices in certain areas from places like Craigslist, or classified ads in local newspapers.

6. Get pre-approved for a loan. Having the money ready when shopping for good deals puts you at a great advantage, so try to not make any offers until you know that you will be able to borrow the money. Being pre-approved for a loan will make your offers more credible and increase the chance that you will succeed in buying the property.

7. Have some cash readily available. Having some money that you can access quickly will also save you a lot of headaches. That money can be used to make a quick down payment, which will secure the deal, or to pay the interest, tax, and insurance.

8. Hire a professional inspector. Having a professional inspection can give you peace of mind when investing in a property. The few hundred dollars that you will spend on the inspection could possibly save you thousands in the future. Issues like roof or foundation damage are hard to see by someone who isn’t a qualified inspector, and can become very costly if left unrepaired. Of course, before buying a damaged property, you should factor in the repair cost, and then decide how much you are willing to pay.

9. Negotiate the price. After you have found a property that you are willing to invest in, it is time to make an offer and negotiate the price. Having a few other options is recommended, as it will prevent you from overpaying. After the negotiation is done and you have reached an agreement with the seller, you will have to put down a 1 percent earnest deposit, and then you will typically have a couple of weeks to purchase the property.

10. Completion of the sale. Before the completion of the sale, you will have to do an inspection of the property, in order to make sure that all appliances and fixtures that were agreed on are still there. Then the only thing left to do is to collect the set of keys and start working on a plan to make your new investment profitable.

Going through these 10 steps will save you time, money and the headaches associated with buying a property. Once you think that you have a firm grasp on how investment in real estate works, it’s time to find other properties and reach your financial goals.

Why Should You Invest in Real Estate Property?

Why Should You Invest in Real Estate Property-150x150When the recession hit and the housing market started to decline, a lot of investors abandoned the real estate world and started investing in other industries. While relatively slow for the time being, the real estate industry has started to recover and attract old and new investors.

When investing in real estate, if you cannot pay for the property with cash, it is very important to have access to a lender that will accommodate your needs and budget. Knowing people in the real estate industry, such as agents, appraisers, and even home improvement companies can give you the upper hand over other investors. Also, researching the property that you are about to invest in is an important aspect of being a successful real estate investor.

Advantages of Investing in Real Estate Property

Depending on the housing market and many other variables, investing in real estate can be a very profitable business. Here are some of the advantages that you will have:

1. Profit. Finding a home priced low enough and realizing its potential can result in some big profits. Buying a home that is in foreclosure, close to being foreclosed on, or in need of repairs or improvement, is a great opportunity for making a profit. You can buy this home for much lower than market value, repair or improve it, and then sell it for a higher price, netting you a nice profit. Also, renting one or multiple homes that you have purchased will result in ongoing income.

2. Lower taxes. Buying a home will allow you to deduct many expenses, such as the mortgage interest, property taxes, insurance, repairs, and even profit that you make from selling the property.

3. Using leverage. Purchasing a home and increasing its equity without spending your own money is an important part of being successful in real estate investing. High equity will help you save on the mortgage while making profit.

4. Appreciation. Your property can increase in value over time depending on factors such as supply and demand or inflation. Small improvements or repairs can also influence the selling price of your investment significantly.

Real Estate vs. Other Investments

Real estate seems to be the best choice when considering investing your money. The world economy is slowly recovering, but its fluctuations have a big effect on other possible investments, such as gold or stocks. Owning a home has some clear advantages that were enumerated above, besides being a good investment. Besides those advantages, home prices and current mortgage interest rates are very low right now and probably won’t go lower, but will start to increase soon. Other advantages to owning a home instead of other investments are:

  • Having more control over your investment. A home gives you more control than, for example, stocks. With stocks, you depend on big corporations and executives, who don’t make decisions based on your financial situation. If you have a home or apartment that is not being rented, you can always lower the rent, or create other incentives to attract renters.
  • More options. Whether you need some fast cash or passive income, there is a real estate investment that can accommodate you. With stocks or gold, for example, you don’t have many options besides buying or selling.
  • A tangible asset. A home can be rented, sold, or you can live in it. You own the property or the land, and this can give you a lot of peace of mind. Being defrauded in real estate is much harder than in stocks, because you can visually inspect the property or talk to the tenants face to face.

Every investment has pros and cons, but it seems that real estate is the one that offers you the most control, stability and options. But, like all investments, investing in real estate highly depends on your knowledge and financial situation.