Real Estate Investing | Real Estate Investing Blog – Part 2
Why is there cheap real estate? Is it just that some sellers don’t know what their property is worth? Sometimes this is the case, but only rarely. More often a seller is willing to sell for less because it means selling faster or more easily. In other words, sellers will trade a little equity for a fast sale or peace of mind, as in the following situations.
1. Death – After the death of a loved one, family members may want to sell any real estate cheap to be quickly done with the bad memories, or to get their inheritance faster.
2. New Job – A job transfer or new job can give a person a lot of motivation to sell fast, and therefore sell cheap. Often, the seller will end up with two payments, and you will be helping by taking one off his hands. Read more
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Right now I’m up in Bend Oregon looking at potential real estate investment properties. I drove up here from San Francisco last Friday and will be here until the 28th. Oregon has really boomed (especially Bend) over the past several years and it shows. I remember coming up here years ago and seeing single family homes going for $250k. Now the same style is going for $450k. Read more
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If you come across an “investment” property for sale ad on the internet or in the newspaper, there’s a good chance this person is interested in buying property too. Usually they’re running the ad because they need to free up some equity to finance another deal.
Take this opportunity to contact the person listed in the ad and explain to them you’re also a real estate investor. They might have some deals they don’t want or not enough cash to purchase which is great for you. On the flip-side, you could provide them with some “bird-dog” information as well. Read more
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Today I’m going to talk about the many different ways you can make money in real estate. Before you get started with investing, it’s a good idea to know all the different options you have besides just buying a property and renting it out.
When I first got into real estate, I thought there was only one way to make money — borrow money to buy a property, fix it up, and rent it out. The tenants would then pay my debt and expenses, and the property would just appreciate. Now you’re probably asking what’s wrong with that? Nothing, and that’s how I have purchased and maintained a majority of my properties but I still wanted to familiarize you with the many different ways to make money in real estate.
The following list will give you a variety of ways to make money in real estate which most people are not aware of:
- Rehabbing Properties – this is the primary way most real estate investors purchase property. This is what I primarily do and highly recommend hiring a property manager so you’re not involved in the day-to-day details.
- Wholesaling – this is kind of a sneaky way to make a quick buck on a property that somebody else is already trying to sell. You basically become the middleman by finding a good deal and going under contract and then advertise it for more money that you are paying. I am not a big fan of this method even though the buyer and seller’s are both happy with their purchase and sale. To me it seems like you’d have to tiptoe around because if the buyer ever knew what you were doing he’d be pretty upset. Read more
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Nearly 80% of all real estate transactions take place in the lower — middle range of house prices. Specifically the average home in this range is a three-bedroom two bathroom house with a carport or garage and approximately 1100 ft.Â². Why are these bread and butter houses such hot sellers? Because they are the transition houses for people moving up and down the financial ladder of life. They are usually the starter homes for up-and-coming couples and May are the lifelong homes for the blue-collar backbone of America.
This area of real estate investing has several advantages. First these units represent the bottom end of the housing market. The sale prices are low the down payments are usually low, and the demand is high. These homes can be diamonds in the rough. By putting in some minimal fix up and cleaning, you can resell them at a fantastic profit.
An example would be somebody like John who buys single-family homes around $200,000 and renovates them. After he fixes up the homes he rents them out at an excess of $1850 per month. If you run the numbers, these homes are cash flow positive and slowly paying down John’s monthly mortgage. Now John can either hold onto the single-family homes and benefit from the rental income stream or you can try flipping a single-family homes to other investors and make a profit.
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Rental properties — small apartments and single-family homes that you rent out — are good investments because there is always a shortage of housing, and there are always people who can afford to rent but cannot afford to buy a home. Because of the high price of home ownership, and the fact that it is generally undertaken with borrowed funds, there will always be renters, those who are afraid of the financial obligation or unwilling to leverage themselves into ownership.
The main advantage real estate offers is leverage. Using a small amount of money — or even no money, in a few cases — you can buy real estate worth tens or hundreds of thousands of dollars. The second advantage is the price appreciation that occurs in real estate, whether it is through inflation, or fixing up, or just the fact that buyers and sellers are working in an imperfect market, usually with only a hazy knowledge as to the real value of property. This is even truer and absorb show in markets where the job growth is filling every single vacant rental property.
The house that you bought yesterday for $60,000 may be worth $65,000 to another person. Find that person, and you’ve made $5,000. Price is also boosted by the simple law of supply and demand. The supply of housing is growing slowly, and the population is mushrooming, through both the constant flow of immigrants looking for a place to live and our reliance in the old fashion way of enlarging our own families. As long as demand for housing continues to outrun supply prices will keep going up.
Other factors that affect the price of real estate are the general economic condition of the community, the condition of the surrounding neighborhood, the actual condition of the property, the financing terms, the time period involved, owner financing, down payment, and other factors.
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