A1 How To

It is vital to note that investing in real estate is more complex than simply buying and selling homes. In order to help new real estate investors to decide which plan of action might work for them here are 5 rock-solid strategies.

1. Buy and Hold. As you may know, this real estate investment strategy is commonly known as rental properties. Actually, becoming a landlord is easier than you think. It’s common knowledge that if you buy a property, you advertise it as “for rent” and you sign a contract with your new tenant. In fact, you need to know a lot about your duties and your rights as a landlord or you will find yourself in trouble. It is very important to take into account that screening your prospect tenants is your first line of defense. Protecting your property from damage is your first duty. It will be useful for you to find out that dealing with tenants can be the most frustrating job you ever had. First of all, do yourself a favor and visit a bookstore or library and get as many books on landlording as you can get. Beyond any doubt, armed with this knowledge you will be able to create a positive cash flow and a long term relationship with your tenants every time you put the “For Rent” sign in the yard. By the way, with the buy and hold strategy you basically have 3 income streams going at once. As a matter of fact, amortization; while paying your mortgage you also lower the amount you owe. Appreciation; while owning the property it increases in amount. Tax incentive; as a landlord you will be able to deduct your investment cost over several years. (See you tax advisor for professional advice). As far as my personal experience can be taken into account, even if the rent doesn’t cover 100 % of your mortgage payment you will still be able to create a positive cash flow.

2. Flipping. It is obvious that when you take a closer look at this issue you would see that this is the art of “buying” and “selling” real estate investment without actually taking ownership. Actually, in a flip situation real estate contracts get assigned and the person who assigns the contract to someone else typically gets a commission for their services. So far as we know, that’s how you can make money with real estate without credit checks or no money down. Because you never take possession of the property, as far as this issue is concerned, you don’t need to apply for a mortgage. You only need 2 things to be able to flip a home. First of all, you need to find an attractive property that will sell very quickly. Secondly, you need to find a user within a very short period of time. If we are making a closer investigation of this problem, then you simply flip the contract to the new buyer and you will collect your commission at a so called “double closing”. Don’t be afraid: this sounds complicated at first, but with a little bit practice you will be able to create a nice profit from this. By the way, according to my experience, this is the preferred concept of most real estate “gurus” who appear in late night infomercials.

3. Rehabs. One of the operative secrets for you to know is that rehabs are the most risky form of real estate investments. Of course, you hunt for a cheap, run-down property and you hope that your preliminary remodel cost estimates will leave enough room for a nice profit. But in fact, most real estate investors are failing with this type of strategy. Actually, you either didn’t get the property cheap enough to make a revenue or the damages are more extensive than estimated which will offset the cheap purchase price. There is also a need to point out that if during the rehab phase of typically 3-4 months the market is going south all bets are off.

4. Commercial Real Estate Investment. Let me ask you: what comes to your mind first when you think of commercial real estate investment? Well, big factory complexes, shopping malls or maybe huge office buildings. Everything is elementary: anything bigger than a 4 unit apartment building, some call it fourplex, is considered commercial. It’s well known that the great thing with commercial real estate is that the value of the property is determined by the rent income it generates and not by how crazy people are going with bidding on residential real estate. To make things clearer, theoretically there’s no such thing as sellers or buyers market for commercial real estate. Of course, as you know, commercial real estate is more or less off limits for beginners, because commercial real estate lenders want to see some form of prior experience in real estate investments. However, don’t be afraid, if you got some experience, go for it. As an added effect; the competition is far less.

5. New Construction. Beyond any doubt, this is the most affordable and easiest way of real estate investment. It is interesting to know that getting into the earliest phase possible of a new development is a sure thing to make money. Keep an eye on the market and you will be able to sell your new home before construction is finished. There is also a need to point out that the construction companies don’t like this, so they limit the number of homes an individual can buy. By the way, even so, keep one or two homes constantly under construction and you will make some nice profits. Of course it’s common knowledge that this works only in a sellers market. Call up: stay away from this strategy in a buyers market or when you see big changes in the local real estate market.

Read Cheap Homes Florida, Rehab Properties and Florida Wholesale Properties.

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