By Jeanette Joy Fisher
Many real estate investors struggle for years and never make the money they dream about. They buy books, ebooks, and DVDs, watch all the infomercials and reality TV shows, go to expensive seminars to learn from the real estate gurus, and pay exorbitant mentoring fees.
After all the excitement wears off, they real realize they never took action to make money. Why?
Because they invest their money in all of the products and get confused about which steps to take. One weekend they drive around looking for ugly vacant fixers; the next weekend, they spend all day calling for sale by owners; the next week they try to talk a bank into a short sale; the next week they look at houses with an agent; the next week they go back and drive around looking for ugly vacant fixers.
Don't get caught up in this merry-go-round, flittering one way and then the next! Choose ONE investing strategy and become the expert!
First, you need to figure out how much cash you can raise to make your investment. If you have no money, you need to select a way to start investing that is POSSIBLE to do with no money down. If you have good credit, you can buy real estate with financing, but you will need to meet ALL the mortgage requirements. (Read our FREE ebook on Credit Tips for Mortgage Financing. Worry Free Credit Help)
Flipping Properties, Wholesaling, or "Bird Dogging"
If you have no money, no great income, and poor credit, you need to work harder to get started. One way to do this requires a knowledge of home prices and repair/upgrade costs. This system can make you a considerable amount of money without having to do any repairs yourself. Wholesaling involves finding properties and reselling the sales contact to other investors. Depending upon your market and how good you are at finding bargains, you can flip these properties fast. Then you'll have some money to clear up credit issues and prepare yourself to buy a property with some money down.
Fixing and Flipping Houses
Like the popular TV shows, the next way to make money flipping houses is the most popular. The concept is quite simple (at least on the surface): you find a home that's in need of repair or upgrading, you go in and do whatever work is necessary, and then you put the home on the retail market. Depending upon where you live, how hot your market is, and how good of a bargain hunter you are, you can sometimes make $25,000 (or much more) on a single transaction.
There are some dangers involved in that strategy, of course, including paying too much for the property in the first place and then in underestimating how much the repairs or upgrades will cost. In fact, the latter situation provides one of the most common points of tension in the various television shows devoted to flipping houses, so it's best to have a solid knowledge of home prices and repair costs before you attempt any flipping method. (FREE ebook on Flipping Houses)
Lease-Options
Another method that works well is to buy a rundown house, do whatever it takes to bring the property up to standard, and then to rent the home on a lease-option basis. There are some advantages to this method. First, you can get a potential buyer into your home without having to pay a real estate fee. Second, you'll be getting a renter who genuinely wants to buy the home at the end of the lease, so they'll take better care of the property. Finally, there may be some tax advantages to you if it takes more than a year for the lease option period to expire. Check with your tax advisor for more details on that.
If the tenants do not purchase the home, often you can keep renting the home and borrow your profit by refinancing and use the money to purchase another home. (See Beginner's Real Estate Investing Guide: How to Buy Fixers)
Pre-Foreclosures
Too many beginning real estate investors think they can make a bundle talking to home owners in foreclosure. The problem: they live in an area with few foreclosures! Check to see if you have many foreclosures in your area. If HUD has houses in your location, you might have a good (or sad) market. I can't even begin to count the number of students who call me and ask where the HUD list in Southern California is. This is what our HUD list says: There are no Available Properties. Check your HUD list and see if you have any bargains waiting for bids.
You can tell if many other investors will compete with you with all cash offers by looking in your local free newspapers or PennySaver. If you have more cash for houses ads than houses for sale, you will need to make your pitch to home owners better than investors with all cash. You can do this if you have a mortgage in place and a closing agent ready to close quickly. Look for a lender on Money for Investors.
Tax Liens
Check out your tax lien situation by calling your county. Go watch a tax sale. Before you spend money on tax lien books, seminars, and informational products, make sure you have properties going on the auction block! If you go to a tax lien sale in many counties, you will go up against a group of investors who have prior agreements not to bid against each other. They take turns on properties. When an outsider bids, they drive the price up. However, you might have the perfect situation in your county to make a killing on tax liens.
Vacation Homes
This is my absolute favorite way to make money in real estate! It's easier to buy a second home than it is to buy an investment house. You can buy a second home with little or no money down with better interest rates. You get to take a vacation and work on a house in a fun location. Plus, make money! Read our FREE ebook: How to Get a Free Fishing Cabin or Dream Vacation Home (PDF)
There are many other ways to make money in real estate including investing in apartments, undeveloped land, strip malls, commercial real estate, duplexes, pre-construction, and short sales. (See How to Negotiate a Short Sale.)
Don't spend your time on the real estate investing merry-go-round. Playing in real estate won't make money. You need to make a plan of action in ONE system and become the expert.
Joy to you in making money with real estate!
Jeanette Fisher
America's "Dream Home" Maker
Joy to the Home, Design Psychology
Homes for glorious living and top-dollar sales
Copyright © 2006 Jeanette J. Fisher