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Real Estate Investing Strategies
By Vic Hurlstorm | October 1, 2008
Investing in real estate is a great way to make some extra money and diversify your portfolio as well. Before you lunge in and purchase your first investment property it is a good idea to have some real estate investing strategies in mind. Searching for properties that are below market value is what many savvy investors do. A good way to find these is to look at buildings that are foreclosures. Some buildings that have been foreclosed on will be ready to rent or resell immediately at a profit. In order to sell some properties you may need to do some updates or renovations before they can be sold. Knowing what kind of properties you are looking for, finding a realtor you can trust who specializes in foreclosures and let him or her make the best deal possible is the way to come out ahead everytime.
Before you begin investing in real estate learn the various investment strategies. Most real estate investors use this common strategy but it also leads to the most problems as well. That real estate investing strategy consists of buying properties which the investor believes will soon increase in value due to market-wide appreciation. Although this strategy can be used successfully, it is based on pure speculation and can fail. Use these three investment strategies that are based on fact and not speculation. The first is known as the bargain purchase. Choosing a prorperty using the bargain purchase method will often allow you to buy that property at twenty percent below market value. This allows them to make up to a twenty percent profit using this real estate investing strategy and is a great strategy to use when purchasing foreclosures.
The second strategy is known as the increase value strategy. Using this strategy the building would be purchased at current market value. There must be some improvements that could be done within a six month time period that would increase the value of the building by twenty percent for this strategy to be successful. Finally, many real estate investors use the double digit cap rate. The double digit cap rate strategy is used for buildings that have a capitalization rate of ten percent or more. The net operating income from the property divided by the purchase price is the captalization rate. You can profit big with these things if the market is depressed or you are looking into small market niches. With the many different types of real estate investment strategies out there, it is always wise to have a real estate on your team because they can help you make the right decisions as well as show you any foreclosures you might be interested in.
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Topics: Real Estate Investing | Comments Off
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