There are 6 techniques to investing in real estate.If you've
ever met someone who's made their millions in real estate, I'm
betting that they used more than one of these techniques. It's
important for every investor to understand every one of the techniques
even if they don't intend on making it their life blood because
you never know when an opportunity is going to arise. If you know
the technique you can recognize a plum opportunity. Here are the
6 techniques:
- Foreclosures (and Preforeclosures)
- Option Real Estate
- Wholesale Buying (including Renovations)
- Discount Mortgages
- Flipping Assignments
- Appreciation Buying
I will go through the techniques one at a time in a little detail
but I have links that have more detail for those that are interested.
Foreclosures and Preforeclosures
When a person is behind on making their payments to their mortgage
holders an opportunity is created. You can come along before the
mortgage holder actually forecloses and arrange to buy the place
for what is owed on the mortgages. This is called Preforeclosure.
If you buy it after the bank takes financial possession of the
property it is called Foreclosure.You can find out more about
Foreclosures in my Foreclosures
link.
Option Real Estate
Did you know that you can collect rent from a building without
actually owning it? Welcome to the world of option real estate.
Generally an option is a contract with someone saying that you
have the option to buy their real estate at a specific time for
a specific amount. Until that time comes you can rent it out for
an agreed upon price. A sandwich lease option is where you enter
into a contract with a property owner and get the property under
option for price x and rent y and then you option it out to a
qualified tenant for price x+profit and rent y+profit. See more
details in my Real Estate Options
link.
Wholesale Buying
One of the great tenets of real estate is that you make your
money when you buy the property never is that more true than in
wholesale buying. In wholesale buying you buy properties at 40%
- 60% of their value. They are typically vacant, abandoned and
might even be boarded up. See more information in my Real
Estate Wholesale Buying link.
Discount Mortgages
One of the great ways to get involved in real estate without
dealing with the bricks and mortar is to deal in real estate paper.
That is, buying and selling mortgages. When a person creates a
second mortgage with a private individual an opportunity is created.
If the note holder wants their money sooner rather than later
the note can be sold for some percentage of the mortgage amount.
It's a win-win situation. See my link on Discount
Mortgages.
Flipping Assignments and Properties
When you find a great deal and you are in need of fast money
one of the great opportunities is Flipping. After you get a property
under contract (see Making the
Offer), it is sometimes best to sell that contract to another
real estate investor (this is called flipping assignments). Another
thing that you can do is buy the property, do some minor cleaning
and painting and then resell it for more. See my section on Flipping
Assignments
Appreciation Buying
This is the most common type of investment buying. My dad did
it and his dad before him. Basically you buy a property that cashflows
and wait for it to go up in value. No rocket science but in most
cases reliable. See my link on Appreciation
Buying.
Real-Estate-Haven
Real
Estate Investment Techniques