Buying Investment Property 101

Is your real estate investing philosophy to always be on the lookout for the perfect investment property that will yield immediate dividends, will provide long-term benefits, and will consistently increase in value? This is how most real estate investors live their lives. But when economic times are tough and many people would agree that we are living in just such a time, you may have to alter your outlook somewhat. Let’s discuss some of the changes we have to make to our investment outlook that has the potential of paying huge dividends today–with the promise of much greater returns in the not-so-distant future.

Many real estate investors have become somewhat cautious and pessimistic of late. They behave as if the world is coming to an end and they want to hang onto every dime they have instead of going out and investing it. None of us will be able to take our material goods with us and we are all going to leave this earth one day for sure. So now is the time to educate yourself to new strategies and make a decision to change your style of investing to include those strategies that will bring returns in the future.

First of all, change your mindset. It is possible to create tremendous wealth in real estate regardless of the current market conditions. While we’re in the midst of an investing climate that hovers somewhere between perilous and challenging (depending upon who you ask), there’s still a ton of money to be made. To cash in on the profit potential that’s at your doorstep, you need to analyze a little more to uncover the right solution. It’s not as hard as you might think.

It is not the same challenge as when the market was flying high, a real estate investor could do no wrong. It was almost impossible to mess up a deal, and quite a few novice investors managed to turn a bad deal into a marginal-to-good deal by exercising a little patience and letting rapid-fire property appreciation correct their mistakes. Those days are gone. Now you have to include the cost of carrying your real estate investment in your analysis. When you do not add the carrying costs, you’ll feel the repercussions of your error in your sleepless nights and when you stare it in the face every month when you look at the bottom line. The real secret to investing success is realizing that successful strategies change with current market conditions.

Here are the three most lucrative investing strategies for this real estate market:

1. This strategy can be called wholesaling. Begin by looking for motivated sellers. They are everywhere you look because they are the people who needing to sell due to job loss, relocation, or possible bankruptcy. They are more willing than ever to deal with an investor that will help them develop a workable solution that gets them out of the bind in which they find themselves. You can come to the rescue of desperate homeowners by putting properties under contract for pennies on the dollar and assigning your right to purchase to another investor, keeping a tidy profit for yourself in the process. You solve the homeowner’s problem by creating profit potential for another investor–and earn a great pay day for yourself.

2. Most have learned about the availability of short sales. With short sales, you get to play super hero by helping a homeowner to avoid foreclosure and you’ll also be doing their friendly banker a huge favor. Banks are taking back record numbers of properties and bankers are desperate to get these properties off their books as soon as possible. Desperation leads to great deals, so by negotiating on behalf of the homeowner, you help them to avoid foreclosure while helping the banker avoid yet another REO. The payoff to you is a good property at a great price.

3. Real estate owned properties (REOs) in the hands of lends make for great opportunities. Once a lender has taken a property back into its inventory in foreclosure, the homeowner is out of the picture, but the property remains. As banks watch their inventory swell, they want nothing more than to unload properties as quickly as possible. The reason is simple: A property in inventory is a massive liability to a lender. Between carrying costs, lost profits, and vacant properties that are producing no income, lenders are faced with another problem: They can’t lend money to other borrowers, which tend to even further restrict their ability to turn a profit. Your offer looks increasingly appealing the longer they have a property in stock. Of course, this doesn’t always mean that you can conclude a transaction with the lender quickly.

These solutions are a recipe for financial success today in the current market Learn how to capitalize on them now and this could be the start of some of your best real estate years ever! If these strategies are outside of your comfort zone, you owe it to yourself and your future to learn how to take advantage of them by educating yourself further.