Doug Digs Real Estate

The crash of the residential real estate market is no reason to think that it's impossible to still make money in real estate. Even while the economy appears to be heading into recession, you can still make money in today's market.

Real estate is one investment that is needed by everyone. We all need a place to live. If you cannot afford to purchase a home of your own, you have to rent. One way to make money in a declining real estate market is to buy a home that is on the verge of foreclosure where the residents are still living in it.

By purchasing a home that is on the verge of foreclosure, you can allow the former owners to stay in the house and continue to make payments to you as their landlord. You can refinance the mortgage so that the interest rates are lower and the mortgage rate is much less than what the people were originally paying. You can help them out by lowering their monthly rent payment and allowing them to stay in their home until they can afford to either buy the home back from you or move on.

If they cannot afford to continue to live in the home, you can rent the home out to other people. The home will be a long-term investment for you as well as a tax write off. If you are planning on investing in real estate in this manner, make sure that the home is located in a desirable area. Property values are more stable in the most desirable areas. When the market rebounds, your home will be worth a lot more than you paid for it.

In many cases, a person who is on the verge of foreclosure has no idea what they can do to help themselves. If they have children who are attending a nearby school, they may not want to uproot them. You can help them, and make a wise investment, if you purchase the home before it goes into foreclosure. By negotiating with their lender, you may be able to purchase the home for less than the loan amount. This is known as a short sale. Short sales will be discussed more thoroughly in another article.

Helping people, who are on the verge of foreclosure to be able to stay in their home, as well as have the potential to make you some money, is a win-win situation. You will have made a solid investment and they will most likely take care of the home. Also, they will be able to avoid having a foreclosure on their credit report. A foreclosure on their credit report will make it almost impossible should they ever want to buy a house in the future.

If you are looking to get rich quick in the real estate market today, you're in for major disappointment. The real estate market took a nosedive this past year and has reached rock bottom. Residential foreclosures are at an all time high and continue to grow.

Does this mean that investing in real estate is a poor idea? Absolutely not! Now is the perfect time to invest in real estate. Today's market represents many excellent opportunities for buyers. Mortgage interest rates are lower than ever. Inventories are high, sellers are offering incentives and discounting their prices. It is hard to imagine a better time than right now to invest in real estate.

Real Estate Investing Tips for Today's Market:

1. Look for the long-term investment. Be prepared to hold onto the property for a few years until the market rebounds.

2. Consider residential income property. People always need a place to live. You can rent your property to those who need a home and make money when you sell after the market rebounds.

3. Think about investing in commercial real estate. Although residential markets have seen better days, the commercial market has remained stable. You can invest in property such as strip malls and office buildings and still make money.

4. Consider investing in vacant land. Look for property in areas that are undeveloped. You may find that in a few years your property is worth many times more than what it is today. Think of the people who owned farmland in Orlando. The property is now worth thousands of times more than the original purchase price.

5. Do not panic. This should be rule number one. If you own a home, do not panic and sell. This is how you lose money in real estate. Hold onto your property and weather the storm. The market always rebounds.

6. Consider new construction. If you are able to act as a general contractor and build your home, you will gain instant equity. "Sweat" equity is a great way to make money, especially in today's market.

7. Buy foreclosures. Look at foreclosures that are on the market and those that are owned by banks and lending institutions. Put in a low-ball bid. There are thousands of foreclosures in all types of neighborhoods. By investing in foreclosures, you can make serious money if you hold onto the property for a while, and then sell after the market recovers.

8. Educate yourself. There are many quality books, written by savvy investors that can guide you through the maze of real estate investing. The astute investor is no accident. The educated investor finds the real bargains in today's market.

9. Keep in mind the phrase Nike made famous, "JUST DO IT!"

A lot of people have a false impression that to make money investing in real estate, the only thing they have to do is find a property, buy it and then resell it. This is far from the truth. In fact, investing in real estate is more than a part time job. There are many things you must do in order to make money with real estate.

The first thing you must do is formulate a plan of action. First and foremost, you will need to have an objective for your investment. This means developing a plan to determine what you are going to do with the properties you purchase. Are you planning to flip the property, or do you want to keep it for rental income? This can make a big difference in the properties you consider. Some homes are perfect for flipping. Flipping is where the investor buys the property and then puts it right back on the market in hopes of selling it for a quick profit. Others are best suited for keeping as rental income. Once you've decided your objective, the next step is absolutely critical if you are to be successful.

In my opinion, this is the most critical aspect of your investment plan. You must get to know your market. Just because the house down the street is being offered at auction for one third of the appraised value, does not mean it's a good investment. The house may need extensive repairs. It might need a new roof, or costly foundation repairs. The house may even have a mold problem. Any of these could lead to investing more time and money than you really want to put into an investment property. If you buy a property that needs extensive repairs, will the neighborhood support the value once the repairs have been made? In other words, will you have the most expensive property in the neighborhood? The surest way to lose money in real estate is to overbuild for the neighborhood. Get to know your market. It's critical to your success.

When you know your market, you can determine what is and what isn't a good investment. You will know how long it should take to sell your potential investments. A good real estate agent can help with this type of information. He or she can tell you how long the properties have been on the market, what the listing prices were and what they sold for. Using an agent to assist you with your purchase can save you countless hours of research and usually there is no fee for their services. If you're serious about investing in real estate, I highly recommend you establish a working relationship with a Realtor®.

Investing in real estate is more than a part time job, but if you make the effort, the rewards can be substantial.