Responsible real estate investing is a savvy way for regular individuals to make some additional money and branch out their portfolios. Before you set about buying your first real estate investment, you should develop your own real estate investing strategy.
Experienced real estate investors try to find properties priced under market value. Locating foreclosed properties for sale is thus a practical way to start. In many instances, you will be able to make a profit by renting or reselling foreclosed real estate straightaway.
Other foreclosed properties will need a face-lift before you can resell them though. The first step is to locate a real estate agent with a good reputation. Together you can analyze the type of real estate foreclosures that fit into your investment portfolio at a given moment.
Usual real estate investment strategies
There are a few investing tactics that you should know before you get into real estate investment. Paradoxically, one of the most used real estate investing strategies can have dire consequences if you do not know what you are doing.
Some investors purchase certain properties thinking that their price will rise at once thanks to a market-wide appreciation. On paper, this real estate investment tactic looks very profitable and can certainly be successful, but it is extremely risky as it starts from pure speculation.
Three factual real estate investments
Here we have three real estate investing strategies you can apply that do not rely on speculation but on actual facts.
- The first is known as the bargain purchase. Real estate investors that utilize the bargain purchase system to pick out a real estate property pay twenty percent below market value for the real estate. This strategy is particularly suitable for buying foreclosed properties. With this real estate investment tactic, investors can turn up to twenty percent in profits.
- Our second method is called increase value strategy. Investors that apply this technique buy the real estate at the actual market value. This real estate investing tactic is productive when you enhance the real estate to such a degree that it augments the value of the property by twenty percent at least in a six-month time frame.
- As third strategy, real estate investors apply the double-digit cap rate. The double digit cap rate system is suitable for real estate with a capitalization rate of ten percent or higher. The capitalization rate is, in short, the net operating earnings from the real estate that are then divided by the buying price. Such properties are only easy to locate when markets have a downwards trend. Limited market niches are a good place to find them.
Finally, an honest real estate agent that advices you is a very important part of a good real estate investment plan. It does not matter which real estate investing system you favor, a knowledgeable real estate agent can help you to take decisions that make sense, keep you updated and notify you about promising listings or foreclosure lists that can benefit you financially.
If you surround yourself with good advisors you too can go into real estate investing.