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7 Secrets to Enormously Profitable Real Estate Investing

Sep 6, 2007
Knowing how to negotiate and close a deal is one thing. Being able to structure different types of transactions and think on your feet when in front of a seller is quite another. You need to become a transaction engineer so whatever comes your way you can handle. Here are some examples to work from and build your real estate portfolio.

1. Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.

If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.

2. Owner financing (also called seller financing or owner carry-back) is when the seller of a property allows the buyer to pay all or some of the purchase price over time. Typically, the transaction is set up as a private mortgage which means that the seller holds a lien on the property just like a bank. In many situations, this may be an optimum solution for both the buyer and seller.

With owner financing, sellers have the opportunity to attract a larger number of buyers, and overcome potential valuation problems, which can result in a higher sales price of their home. Buyers can obtain a mortgage when they might not qualify for one otherwise, and can achieve lower closing costs which could result in thousands of dollars in savings.

3. Investing in pre-foreclosures with short sales has never been better. With our home study real estate investing course, we take you step by step and introduce you to a creative technique called a real estate short sale. Short sales allow the real estate investor to discount the loan from the lender. You must know this technique if you want to be competitive in today's market.

4. A lease option is just a technique that involves gaining control of a property, but not ownership. Just the right to posess a property and purchase that property at some future with terms you define today.

5. Subject to is getting the deed to a property without getting a new mortgage Instead, the seller signs over the deed to his or her home "subject to the existing financing" staying in place. The buyer in this case makes the mortgage payments on the old loan, but does not get a mortgage themselves to acquire this home.

Both of these techniques usually require little or no money down. In both of these techniques it is possible for the buyer to get money from the seller or the purchaser (or both) in the beginning of the transaction. These techniques, when used properly, can provide for huge profits. They are awesome strategies and when used hand-in-hand, are almost an unbeatable pair!

6. Retailing a property as an investor usually involves buying a junker subject or with money from hard money lender, doing the necessary repairs and selling for a profit. While this can be one of the most profitable ways to make money in the business, I don't reccomend it for a beginner in the business. Doing a lease option on a property you aquired subject to on a pretty house is one of the easiest ways to get started.

7. Wholesaling It is simply finding a bargain property and passing it on to a bargain hunter. That bargain hunter will be an investor who will either purchase the property to resell it or purchase it to hold it for rental income. Your profit as a wholesaler should be between $5000 and $15,000 on each house. In some cases it will be higher than $15,000 and on some deals your profit may be a little lower than $5,000.
Real estate investors choose to wholesale properties for a few reasons. They could be:

Quick cash, it is possible to turn a property around anywhere from 7 to 45 days and get cash in your pocket. If you need to get your hands on some cash quickly, this would be a reason to wholesale. Or, you may not need the cash immediately. You might just want to build your cash reserves. Wholesaling is a good way to do this quickly.

Too many houses - maybe you're good at finding houses, but you find more than you need or can use at any given time. If this is the case, wholesaling is a smart move for you. You can still profit from your locating skills, even if you aren't going to keep the property for your personal portfolio.

Flexibility - at any given time, you can determine whether you want to keep a property or sell it. This gives you flexibility as you locate and purchase properties.

Probably the most important thing that you need to remember when you decide to wholesale is, your buyer should get the majority of the profit! This is important because your buyer will be the one to purchase and rehab the property. There has to be enough room in the deal for your buyer to do this and still retain a nice amount of money for cash out and/or equity.

This does not mean that you find properties and give them away for $1,000. If you did that, you would be a bird dog, not a wholesaler. Your profit will vary depending on the house, but the better you are at locating properties and putting together offers, the greater your profit will be while still maintaining an excellent profit for your buyer.
About the Author
Richard Reichmann is internationally known as a millionaire maker. He's a leading consultant in real estate and internet marketing strategies that are profit proven.

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