Real Estate Investment Strategies

Let’s talk about the top real estate investment strategies that are used in today’s market. The economy will predict what creative real estate investing is best for any given time.

1. Buying Rental Properties

The buy and hold strategy is great for passive income if you buy at the right location at the right price. Let me tell you a little about my real estate investing experience.

I bought a rental property when I was 18 and of course it was not in my back yard. It does cash flow when tenants make their payments and it can be a financial drain when there are repairs and vacancies.

If you look at the big picture, your goal in the buy and hold strategy is to find a property where the housing market is stable and the area is good for solid renters.

Having buy and hold properties works as a financial strategy for several reasons. First there is monthly cash flow along with future equity gain. In the meantime your property can be a tax deduction.

You can deduct mortgage interest, property management fees, hazard insurance, taxes, repairs and business expense. Who loves the idea of having a tenant pay your mortgage? Everyone should have at least one rental property in their portfolio.

2. Wholesale and Assignments

The best real estate investments for quick cash are wholesale or assignments. Say you find a great deal and lock the property up under a purchase contract to buy at an amazing discounted price.

You can find an investor or homeowner who wants to purchase the property from you. You can either wholesale it by buying it yourself and reselling to them at a higher price or assign your purchase contract to them for a fee.

Again it all boils down to buying at the right location and the right price. If you are new to the area you could learn from realtors who work with investors to find a target area that is hot with bargains and buyers.

Realtors can also be a great source in finding an investor to buy the property from you. You can also find out what properties have been sold that needed repair and drive by those locations. You might find construction going on at the property.

Talk to everyone, soon you’ll find the buyer. Network and build your team of buyers. The buyers will come if the price is right. Remember if you target this creative real estate strategy you will want to make it a “win” “win” for everyone.

You have to sell it at a discount to an investor to make it worth their time and money to profit as well. Remember if you do one or two a month at a minimum profit of $5000, how much time will it take to replace your income? Small gains multiplied are a wonderful thing!

3. Buying a Short Sell Home

What’s the buzz about short sales? I seem to hear the word “Short sales” at every seminar lately. It can be very profitable; you must have patience and time, this is one of the real estate investment strategies that take a lot of time to work. Your objective is to find someone in default that wants your help and is in a financial hardship. They must be behind in their payments and willing to work with you.

The Short Sale Process makes it one of the most creative real estate investment strategies and requires a lot of people skills. You must be willing to help and listen to people and have amazing patience to deal with those lenders who sometimes need a wakeup call to reality.

I’ve heard it all from continuing to fax documentation to the lender’s loss mitigation dept to mailing them a sample of the wonderful smells of a pet friendly carpet from the homeowner’s house.

Sometimes the banks need a reminder of the condition of the property to accept or approve the short sale acceptance of the loan. If you like challenges and have time to reap the rewards, this could be your best real estate investment technique for the real estate market today.

4. Flipping

Want to be a flipper? There has been some speculative real estate investing strategies that do not do well in a tough economy, this is not one. You can still flip properties in the United States. It comes down to the basics, right area and right price. I’ve seen investors flip in high unemployment States like Michigan to high foreclosure states like California, Arizona and Florida.

This is one of the real estate investment strategies that you have to become a market expert in your area to insure it will work for you. Check out your local MLS (multiple listing systems). Conduct a search on properties in need of repair, how long where they on the market? How much did they sell for? What the property to see how long it will be before relisting.

If you find an active market with an overflow of foreclosures this could be your game. Follow those who are flipping for a profit do not try to make the market work for you, work the market.

5. Auctions

Auctions, auctions, you see them all over on the billboards. Auctions can be profitable if there are more properties for sellers then buyers. I tend to stay away from the single home auctions as they are more likely to get bid up as people will become emotional buyers.

You will have to do some research before bidding on a property and you will be required to have a cashier’s check in order to be qualified to bid on properties. The majority of the properties listed will be available to view and tour prior to the auction date.

Do your research and run your numbers. It is wise to go into an auction knowing what your maximum bid is per property.

There are two types of auctions, absolute or reserve. Absolute means the auctioneer has been given permission to accept any reasonable offer. Reserve is where the bank has a minimum bid that will be acceptable at the time of the auction. Everyone should go to an auction, it’s a blast!

6. Trustee Sales

Trustee sales are hot! One of the best real estate investments for today is attending the trustee sale at the county court house. They are usually held at the court steps. You will find postings at the county recorder’s office. You will also find Notice of Trustee sale postings in newspapers 30 days prior to the sale date. There are many avenues to get these listings.

I tend to go to the source as many times there are postponements. The problem with this creative real estate investing strategy is it is risky, many times the homes are not listed with a realtor and you will not have any access to view the property. You can do a drive by and peer in the windows for a property assessment.

7. Tax Lien

Another note to consider are Liens against the property can be transferred in a Trustee Sale. If the 2nd mortgage lender does not show at the sale they are whipped out and released against the property. The tax and IRS liens will remain. So do your research and bid away. I saw a recent one where there were 3 investors bidding against each other. Fun stuff!

Tax liens are another source of speculative real estate investing. You must know the laws in your State, each is different. Basically you are paying someone’s taxes in which the City has a lien against the property.

If the homeowner eventually pays their taxes and penalties you will get reimbursed your money plus agreed upon interest. If the homeowner still defaults you will have the opportunity to keep paying the taxes and take over the property.

Taxes are a first lien on the property and if purchased this way you will not be liable for someone else’s mortgage. Sweet! Only a few properties actually fall under this category.

Eventually the homeowner or lender will come forward to pay the taxes off, which is ok as some States give you an 18% returns on your money! You will have to research your State to determine the law for tax lien redemption period and interest payments.

In Texas for example the tax lien is an auction where you either bid up or bid down the interest rate. Buying in this real estate investment strategy has risks as again you will not be able to tour the inside of the property, drive by and window peeking is a must!

8. Probate

And the last of these real estate investing strategies I know is probate. I hear there is a lot to be made in the probate market.

The basics are simple, a homeowner dies without a will and his or her heirs must go through a court process call probate to divide the assets.

Many times you are dealing with other items besides houses like vehicles, stocks, jewelry, art work, the list goes on. If you are a kind hearted soul who really wants to help others out of the mess of probate this is your ticket.

Probates tie up assets for days, months and years. Many times when it is finalized the only one who made money was the attorneys. Help those heirs and get them their money!

You will have to get everyone’s approve to act as their representative for the probate. You will help liquidate the assets and divided it amongst the heirs or buy it at a discount and resell all the assets yourself. It is a good way to expand your market strategy for selling outside of the real estate market.

These real estate investment strategies can be very powerful, but nothing comes without work. If you want to big money you are going to have to work for it.

Hopefully you can find a few of these real estate investment strategies to be worth your while.

Other Pages

Short Sale Definition - What is it exactly?

Short Sale Vs Foreclosure - Which one is the best option?