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Realastate: Is Now The Time To Jump Into The Investing Game?

Apr 17, 2008
Realastate investing can be a tricky game, but if you play your cards right it can pad your pockets with wads of cash. Although the market is currently in a slump, experts predict it will rebound within the next 18-24 months. Savvy investors realize that investing in realastate now can yield plenty of profits in the future.

For those starting out in realaste investing it's important to absorb as much information as possible prior to shelling out cash. There are numerous types of investment properties including single- and multi-family houses, apartment buildings, condos, commercial buildings, land and real estate investment trusts (REIT).

REITs are popular to both novice and seasoned investors because they minimize the risk of investment. They work by allowing multiple investors to purchase shares of real estate or by investing in a mutual fund which specializes in purchasing public real estate. Typically, REITs are subject to little or no federal income tax and offer investors high yields.

Most novice realastate investors start out by purchasing a single family dwelling to be used as rental property. Single family homes can include houses, condos and mobile homes. The home can be rented either long or short term, or used as vacation property. Investing in vacation rental property located in a hot market can oftentimes yield a higher profit than properties rented on a long-term basis.

With today's bankruptcy and foreclosure crisis, many investors are now investing in rent-to-own realastate. In this type of transaction, investors purchase the home and rent it to an individual for a certain period of time; usually two to five years. A percentage of the rent is credited to the purchase price and deducted when the homeowner obtains traditional financing. This is a relatively safe investment, as long as the deal is structured properly.

Another popular realastate investment opportunity is known as house flipping. The objective in this game is to purchase a distressed property under market value, make repairs or renovations, than sell it quickly. Although house flipping isn't quite as profitable as it used to be, the right house in the right market could yield a profit of $30,000 or more in 90 days or less.

House flipping is a bit riskier than investing in REITs or a single family dwelling, but for those up to the challenge it can be an exceptionally rewarding experience. It can also cause devastating loss. If you decide to invest in this type of real estate transaction, be certain to thoroughly educate yourself about the process.

Experts predict foreclosure homes and bank owned (REO) properties are likely to become the next hot realastate boon. Considerable caution must be taken when investing in foreclosure homes. Although you might be fortunate enough to locate distressed properties that require little upgrade, a large percentage of these homes require extensive repairs and renovations.

Real estate owned properties are foreclosure properties that did not sell at auction. Usually this occurs when more is owed on the home than it's worth. Currently, banks are selling these properties at no less than ninety five cents on the dollar. For example, if the amount of the note payable is $100k, the minimum bid must start at $95k.

A little known secret to investing in REO properties is to seek out private investors who specialize in purchasing bank owned portfolios. It's not uncommon for these investors to purchase properties for thirty percent under current market value. They then pass a portion of their savings along to individual realastate investors and create a win-win situation for all parties involved.

Realastate investing can be rewarding and profitable. Many people have become self-made millionaires by learning how to play the game. You don't have to be wealthy to participate. It's simply a matter of understanding the rules and paying attention to details.
About the Author
Simon Volkov is a private Real Estate Note Investor who offers REO properties and real estate notes for as little as seventy cents on the dollar. Receive real estate investment opportunities via RSS feed or email subscription by visiting www.SimonVolkov.com today!
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