Real Estate Investment 101

Real estate can be quite a profitable investment, when handled correctly. One of the biggest keys is to buy low, and there are several ways to achieve this. Divorce, death and foreclosure are great ways to find real estate deals. Keep tabs on the newspaper classifieds for foreclosure announcements and estate sale ads.

With foreclosures, a low offer could be accepted, because the property will soon go to the property owner’s worst case scenario – the auction block. Estate sales generally occur after the property owner is deceased, so the sale coordinators may be planning to put the house on the market. A little detective work can make sure you are one of the first buyers in line.

Buying when the market is down is also a good way to nab property with relatively small investment. Not only does this mean less competition for you, but it also means you have the upper hand. A slow market is a buyer’s best friend.

So you bought a fixer-upper and you don’t know where to begin? Save on overhead costs and maximize profits by doing as much work yourself as possible. In certain cases, the seller would have been so eager to unload the property that they will have already done many improvements. However, structurally sound fixer-uppers are the best way to go for low-cost investments.

Whatever the appearance of the home, it is important to remember not to fall in love with the property. Do not become emotionally attached. Consider factors like cost, potential profit margin, location and any features that will help you sell the property.

This is where research and homework come in handy. It can help immensely in the negotiation phase to know a thing or two about the surrounding market – for instance, the direction the neighborhood is trending toward and whether there is currently a price ceiling. Real estate investment is all about numbers. Develop an investment plan and find several different houses to fit into that plan.

Another key aspect of real estate investing is to do your own homework on your own terms. Whether in the form of a class, an article or a “How-to” guide book, find the information that speaks to you. Real estate investing can be a bit baffling. It is crucial to find a source of information that breaks it down into understandable language.

Below are some of the most common mistakes new real estate investors make, and how you can avoid them:

• Pay too much – The importance of a budget and an investment plan cannot be overstated. You must determine your price range and stick to it. Don’t be afraid to walk away – there is plenty of opportunity on the auction block if nobody will agree to your terms.

• Failure to network – Picture everyone you could possibly need to know in the real estate industry. It is important to establish good working relationships with at least one trustworthy person in each industry. Networking is a large part of real estate investment. Membership in the local Chamber of Commerce or BNI can be a great way to establish those much-needed contacts.

• Move too quickly – Something the late-night “Get Rich Quick” infomercials won’t tell you is that real estate investing is a game of patience. If you wait to buy, a better deal may be right around the corner. At least sleeping on the deal overnight can help you avoid paying too much. Waiting to sell can also help maximize your profit margin. Timing is critical. If the market is down, rent the property until you are ready to sell.

• Invest far away – What is the best way to keep an eye on your property and the surrounding market? Not by living in another city. It will be most convenient for you – and you will be most motivated to maintain and fix up the property – if you invest relatively close to home. A good rule of thumb is within a 30-mile radius.

• Underinsuring – You would not underinsure your health, your car or your life. Why would you underinsure your home? Fire, natural disaster and flood insurance are key, as is accident insurance for unforeseen on-property incidents.

• Underestimate – Above all, do not underestimate the cost of investing in a piece of real estate. If anything, you should underestimate your cash flow. Overestimate the amount of time and money you will need to get the property ready for market. Most experts will tell you to double your time estimate and triple your cost estimate. This will keep your real estate investing machine afloat.

Eric Bramlett currently manages his Austin Real Estate Guide, his Austin Real Estate company’s website, & his Austin Condos Guide.

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Flipping Real Estate or Flipping Paper?

Flipping real estate properties is not for everybody but it is the fastest way to make a buck in the real estate business. Most everybody has heard of someone buying a "run down" house for a good price well below market value, fixing it up and selling it at a fair market price. Flipping a "fixer-upper" is definitely one way to turn a reasonably quick profit. I know some people who do it this way but they are more into the contractor and renovation business than they are of the investor mindset.

Some of these "fixer-upper" properties are in need of extensive repair and will involve electrical work, carpentry work, etc. If the investor gets involved and does some or all of this work then there could be enough profit there but if the investor farms out the required labour, profits could get eaten up quickly. For these types of flipping real estate investments, the purchase price needs to be at a huge discount and normally would be found somewhere in the foreclosure stage.

For the person that is in the mindset of investing rather than being in the renovation business then flipping real estate will only involve flipping the paper contract of the property without even taking possession of it. You can flip by entering an agreement to buy a property then sell the contract to another investor before close of escrow.

Using this technique won't even require you to put your name on the title. Profits will generally be less than the fixer-upper investor but involves much less work and the whole process is much quicker. A fixer-upper investor would not be happy in making a profit of a few thousand dollars for a few months work on renovations but an investor that can just flip a contract for a few hours or days work would be.

Avoid disclosure of your profits to the new buyer by using a double closing.
After making a sweet deal and flipping a contract involving a juicy profit you may not want all these details to be revealed to your buyer. The solution is a double closing, transferring the property to you initially and then reselling immediately at the same lawyer's office just an hour later to your buyer.

There is a drawback here and that is a double set of closing costs so you would have to weigh it out to see if it's worth it to your particular situation or not. Further, you can use a title insurance company for the actual closings. For the issuance of the title insurance policy, the title insurance company will prepare the closing documents and close the transaction usually without an addition charge.

Get free tips and information on flipping real estate and build your wealth the way most millionaires have through investment techniques such as flipping and foreclosures at http://www.Real-Estate-Wealth-Builder.info

Article Source: http://EzineArticles.com/?expert=John_Ferreira

How to Buy Real Estate at Government Auctions

A smart real estate investor looks for bargains in real estate; a diamond in the rough. But trying to find these bargains can be difficult to do. Government auctions and county tax sales are just one way of finding real estate well-below market value. Some of the properties will need some minor repairs, but you can find real estate property for pennies-on-the-dollar. The U.S. Marshals Service (USMS) sells property that the federal government orders to be sold. County governments also sell properties that have failed to pay their property taxes.

The U.S. Marshals Service

The U.S. Marshals Service (USMS) offers a wide variety of property for auction to the public which has been forfeited or ordered sold by federal court order under laws enforced or administered by the United States Department of Justice and its investigative agencies. The U.S. Marshals Service sells diverse assets such as high-end vehicles, collector cars, residential, commercial and agricultural real estate, timeshares, sport fishing vessels, aircraft, artwork, jewelry, financial instruments and much more. Much of this merchandise is sold online in online auctions. They have properties listed all over the country ranging from houses, apartment units, and bare land.

One recent example is a home in Boynton Beach, Florida up for auction. It is a four bedroom house with two bathrooms, a two-car garage, and an in-ground swimming pool. The starting bid for this auction was only $171,800! Comparable homes in the area sell for almost twice that amount! Another example is a gas station and dry cleaning storefront that sold outside of Chicago for $42,400! These auctions were both seized by the federal government for failure to pay taxes.

County Tax Sales

If you fail to pay your county property taxes, by law, the county has the right to seize your property and sell it at government auction to recover their losses. These are known as county tax sales. Anyone can attend these auctions and bid on property. Traditionally, these sales have taken place on the county courthouse steps. But more and more counties are starting to have their auctions online. It is very important when you are considering buying property at county tax sales that you perform your “due diligence.” Due Diligence is the process of investigation, performed by investors, into the details of a potential investment, such as an examination of documents, inspection of the property, and performing a title search on the property. This is imperative as most government auctions sell their property “as-is” and it is up to the buyer to make sure all the details are taken care of before they bid.

Buying property at government auctions can be an excellent way to find a bargain. Remember to do all your research before you buy and you may be rewarded with a property well below market value. You can either fix up the property and sell it, or fix it up and rent it out and receive a steady monthly income.

Dean Novosat has more tips and info about buying items at government auctions at http://www.fedsauctions.com

Government And Police Auctions

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How To Find And Acquire Fixer Uppers

Do The Fixer-Upper Math

Renovating homes has gotten a boat load of publicity over the past few years as a great way for prospective real estate investors to make great money over a short period of time. Hopefully, you’ve taken that message with a grain of salt as renovations can often take a lengthy period of time and selling the home for a big profit is never a guarantee.

In fact, as any real estate investor will tell you, a few quick calculations will give you at least a rough idea of your chances for profit, be it large or small. Doing these quick and dirty calculations will not only give you that forecast of the future but determine whether a particular investment is worth the hassle, a step that many real estate investors skip that deserves adequate attention.

Target Your End Value

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You can never, ever use the amount of money you put into a particular piece of real estate as the basis for a price increase. If you bought the home for $100,000 and did $20,000 worth of work to it, you are never guaranteed to get $120,000 out of it. The real estate market simply does not work that way and recognizing that is the first step towards pegging down an accurate end sale price for your profit calculations.

An appraiser is your best resource at pegging an end sale value as the appraiser will be able to tell you the kind of value you will add to a property with a given renovation. If you are going to add a certain amount of square footage or a finished basement or any other improvement, take what the home will look like after you are done and compare it against other similar homes that have recently sold in the area.

That is the only way to determine the kind of value you might receive and an appraiser will keep you grounded in reality when your head starts swelling with the prospect of potential profit.

The Big Minus

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Of course, those renovations cost money and you will have to calculate every piece of dry wall, every nail and every hour of labor that you think will be necessary to get a home to the level you need it to be at. After those costs, you have to factor in real estate transaction costs like your realtor ’s fee, closing costs, potential property taxes over the course of your ownership and loan fees that some real estate investors neglect to think about.

Your expenses are not limited to the amount of money you put into renovations, giving you much more to think about than lumber and nails when you are calculating potential profit. This can be a complicated process and getting expert help from someone that has been through the process once or twice before will be invaluable towards projecting potential profit.

Is It Worth It?

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This is the big question that some real estate investors forget to ask themselves as they pursue a potential investment. If your profit window is extremely tight and your potential profit may be $10,000, perhaps that investment is not worth the hassle of renovating the home, putting it on the market and finding a new buyer. You have to decide for yourself what your time is worth but just because there is profit to be had does not mean that your time is best spent on that project. Everyone’s threshold is different so determine yours and you will go a long way towards picking out projects that you will ultimately be successful with and enjoy.

These simple steps can save real estate investors from getting involved with properties that they are simply not ready for. Think about all of the costs before ever getting involved with an investment and learn to value your time. Doing the math is one thing, but using it to make an informed decision is what separates the real estate investors that fail and those that ultimately thrive.

http://www.joelane.com/Pasco-Wa-real-estate-The-Fixer-Upper-Math.php