Real Estate Investing

Buying homes in foreclosure has become a big business for real estate investors. They can be purchased cheaper and after rehabbing them they will be worth more in value.

The foreclosure of a property is sometimes due to not paying the taxes on the property or not being able to pay the mortgage note.

In most cases the bank has taken back the property because the owner failed to pay his mortgage payments. The bank now owns the property and as they are not making any money on this property they are going to try to sell that foreclosure as fast as they can.

Most foreclosed properties are sold at auction to the general public. This is a good way for a buyer to get a house at a lower price as they are nearly always below market value. Real estate investors can also make a good profit from buying foreclosures, fixing them up, then selling them at a good profit.

Buying foreclosures has become very popular for investors and home buyers. If you are a new investor this is a good place to start. You can also buy commercial foreclosures which are very profitable.

You can check the courthouse for a schedule of foreclosure sales and also the newspapers will list the auctions.

If buying foreclosures interest you, then start going to some of the auctions to see what the proceedings are like and what kind of prices they are going for. Get familiar with the auctions so that when you are ready to purchase your first property you will not be so intimidated by the procedures.

If you are interested, then get out there and get your feet wet. It's not as hard as it seems at first. Learn the ins and outs of real estate investing by researching and consider taking a real estate course which will teach you a lot of the fundamentals of investing and some of the pitfalls to avoid.

What is a real estate birddog? This is someone who finds profitable deals for other investors.

The amount of the fees will vary according to the value of the deal to the investor. The birddog fees can be anywhere from $500.00 and up.

One reason why this is a good way to get started in real estate is because it doesn't cost the birddog anything but time to find the deals.

Being a real estate birddog is also a way to have a part time business. It will give you a chance to build up some money for your own investing and then you can be your own birddog. Make it your weekend hobby and watch your savings grow!

Good luck and happy hunting!

Commercial real estate can be apartment buildings, shopping centers, office parks, small retail outlets, etc. Most people believe getting into commercial investing would cost too much money as opposed to investing in single family homes.

The investment need not always be more for the commercial versus single family homes. There are many ways to buy commercial real estate just as there are many ways to buy single family homes. Commercial real estate, however, can be much more profitable.

Take an example of buying a single family home for $100,000.00 and renting it out for $900.00 a month with your mortgage payment being $700.00 a month. Your monthly cash flow would be $200.00 a month. You would have to have many of these to become comfortable financially.

However, on the other hand, if you bought a 4-plex apartment building for $100,000 and rented then out for $600.00 a month each your monthly income would be $2400.00 with a monthly positive cash flow of $1700.00 ($2400.00 less your monthly mortgage of $700.00) compared to your $200.00 a month from a single family home.

Another benefit to owning the 4-plex compared to the single family home would be that if the renter in the single family house moved out you would have a negative cash flow of $700.00 for the mortgage until you could get another renter.

If you owned a 4-plex, however, even if with two vacancies you would still have a positive cash flow from the other two ($600.00 x 2 = $1200.00) with your monthly mortgage being $700.00

Some people think of only buying and selling houses as a real estate investor. Don't be left out of this exciting market of commercial real estate.

You see it on TV all the time now. Every weekend you can watch the house flippers as they go through the joys and pitfalls of finding properties that are undervalued and just waiting to be rehabbed to turn a good profit and also some of the problems a flipper sometimes encounters.

If you can look at a property that is rundown or sometimes just needing a facelift and say to yourself, "You know, with a little work I could bring this place back to life and make a profit doing it", then you might at heart be a flipper.

Of course, there are many things to consider when thinking about going into the house flipping business. The first thought is probably "where will I get the money to buy the house and pay for the repairs and then pay a mortgage note while I hope for it to sell quickly?" This is always the first hurdle you will need to get over to get started. There are many ways out there now to buy with no money down or using some creative financing. Also there are HELOCs and hard money lenders (I will be writing some articles on these options in the future).

You need to study and learn as much as you can about real estate, buy some books or take a good real estate course. You need to get a good understanding of how the real estate market works before you make that first purchase.

Another big question is "what if it doesn't sell right away after I have finished it?" One solution if it is taking too long to sell is to rent it out. There is usually always a demand for good rental property. That would also give you a good little income.

Another thing you could do when you have it rented or even before it is rented is to refinance the mortgage for the higher market value it is now worth after your improvements. If you have it rented you can let the renter pay those higher notes. You will have some money in your pocket and a house that has equity building in it every day. Not too bad a deal?

Flipping houses is not for everyone but if this sounds like something you think you could do, then get started learning and researching the field.

Foreclosures are a good way to get started with house flipping.

Most people have heard and read about real estate investing but do not really know what real estate investing really entails. They know that it has something to do with making money buying and selling houses which it, in simplied form, actually is. To be a success as a real estate investor you will need to learn a lot more than just knowing how to buy and sell houses. Study real estate investing thoroughly before starting to invest.

Of course, the first thing you will do as an investor is to buy a property. This property could be many things: a house, a mobile home, land, apartment buildings, office buildings, etc. Before you purchase your real estate you need to know what you are going to do with it. Have a plan in place with the exact steps you are going to take to make your profit from this purchase.

One of the easiest ways to get started as an investor is to buy a single family house at a below market price, improve the house to raise its value, then resell for a profit.

Purchasing real estate to be used as rental property is another way for beginners to get started. You will not get a large amount up front but you will generate a monthly income. You can buy one property at a time and slowly build up your real estate portfolio with your equities building on each property.

Purchasing foreclosed and pre-foreclosed property is another way to make money from real estate. Buying foreclosure properties usually involves bidding on it at an auction.

Buying distressed properties can also be a good way to get a property cheaper. Distressed properties usually have some negative effect on their value because of appearance, condition, or the financial situation of the owner. You will likely be working with a bank that holds the mortgage on these properties.

These are just a few ways to become a real estate investor. Start researching, studying, and learning about investing in real estate and maybe soon you will be building your real estate portfolio.

A HELOC is a home equity line of credit where the homeowner can use the equity built in their home to get a second mortgage.

The HELOC works somewhat like a credit card. You are given at closing a specific credit limit that you may borrow up to.

In most cases you will make interest only payments unless you wish to reduce the principle.

A HELOC can be used for whatever you want to do with the money. Some people use it to make home improvements and some people use it to invest in real estate.

In real estate investing if you have a HELOC that will cover the cost of the property you want to buy, then you can probably get a better price because it will be a cash deal. Plus there will be no six to eight week mortgage approval so you can offer a quick closing.

A HELOC can be very useful but remember that it is a second mortgage against your home so use it very wisely. Talk to your mortgage company or banker about HELOCs to find the right one for you. You can also shop around for better interest rates also.

Make sure first of all that a seller is not motivated to sell due to some defect with the home. Do a very thorough check to make sure of this.

Motivated sellers are sellers that need to sell quickly due to many reasons such as divorce, estate settlement, finances, fear of foreclosure, etc.

Motivated sellers will sometimes pay a percentage of the closing costs and some of the other fees associated with the sale of the property.

Dealing with a motivated seller will make the investor's job much easier as he is not going to have to convince the seller to accept his offer. A reasonable offer, even at a lower market value, will usually be accepted by a motivated seller.

It is not easy to find the motivated seller, however. A good place to start is placing ads in newspapers and putting out fliers.

Eventually you will hear from some motivated sellers and you will find it is satisfying to be able to help them out of a difficult situation and also to make a profit at the same time.

Most people do not think of their 401K as an investment vehicle. This is your retirement fund and you do not want to risk it. Real estate investing can be risky if you are inexperienced, so you need to have thorough knowledge and first hand experience in real estate investing before thinking about using your retirement fund.

The way a lot of people are using their 401K to invest in real estate is by taking out a loan against their 401K to invest in real estate. Once you have completed your real estate transaction, and hopefully made a good profit, you can then pay off the 401K and pocket the profits. You must discipline yourself and make sure that you do pay off the 401K or you will be risking your retirement fund and that is something that you do not want to do. Protecting your family for the future should always be a top priority.

There is a limit to how much you can borrow against your 401K. You can only borrow a certain percentage of your balance. This is a good thing because you cannot be tempted to deplete your retirement fund with real estate investing.

One down side to using this method of financing your real estate investing is that there are no tax benefits when you use your 401K as an investment vehicle. It will not be eligible for the tax deduction for mortgage interest.

Consider carefully and talk to some experts in this field before attempting to do this on your own. It can be a good way to finance your real estate investing, but you need to know what you are doing and what the risks might be before taking this step.

There is a lot of money to be made in rental properties, especially now when so many people are losing their homes.

The buying procedure is about the same when you buy your own house to live in. If you are going to have to get a mortgage to buy the rental property, then you could get a renter for the house first to show the lender that you can afford the monthly payments.

Of course, you want to make sure the rent you collect is more than the amount of the mortgage to cover insurance, taxes, and maintenance and still have enough to go in your pocket. If you can't afford the home that you are buying and are relying on the rent money to pay the mortgage, you may run into trouble.

Remember, every month that a tenant is renting your property, your equity is building at no cost to you.

Also, in most states a rental property does not require homeowners insurance, only your primary residence does. You will just need fire insurance which is a lot cheaper. And according to the area, flood insurance, etc., may be required.

The down side to rental properties is that you are responsible for maintenance and repairs and collecting the rent.

There will be times when your rental unit is vacant so you need to keep some backup money for those times.

Rental properties are a good way to create a multiple stream of income for a real estate investor.

Multi unit rental property is a good vehicle for real estate investors. Your profits will be times the number of units you have.

There is not much difference between single family dwellings and multi family dwellings except that you will have more maintenance and upkeep and rent collecting to do.

Especially if you have more than a 4-plex you should consider getting a property management company to handle the unit. The amount you pay them will be negotiated on the number of units and exactly what services they provide such as collecting rent, handling the repairs, etc.

In the case of vacancies, it is best if your profits from 2 units will cover 2 vacancies as far as the mortgage, taxes, insurance, etc. This way you won't find yourself having to make up for the loss of income from vacancies.

There is a lot of money to be made from multi family rental properties if you buy them for the right price, get a good interest rate and have a low vacancy threshold.

If you want to make investing in real estate a success for yourself, there are a few things you need to keep in mind.

Find someone who is willing to sell. There are many reasons why someone needs or wants to sell.

One reason is a change in their personal circumstances and they find they cannot keep up the mortgage payments on their home.

Another reason is they have outgrown their home, or in some cases their home is now too big for them.

Look for the motivated seller. That will be your best bet to make lucrative real estate investing deals.

Looking for a foreclosure? They are not hard to find, especially these days. I've listed a few places below to look for foreclosures.

1. County recorder's office - updated daily.

2. Foreclosure databases - a small fee will allow you to search through their databases 24 hours a day for foreclosures. Before doing this, make sure they update regularly.

3. Call realtors. They always have listings of foreclosures updated regularly.

4. Check your newspapers. There will generally be some foreclosures listed and maybe you can find some pre-foreclosures also.

The more foreclosures you find, the better your chances of finding just the right one.

Before starting your real estate investing you need to write out an investing budget.

Without the structure of a budget you can get in over your head before you know it.

Your budget will change from time to time as you buy and sell properties. Keep updating your budget so you will see where you are at all times.

It can get pretty hectic once you really get going in real estate investing with deals in different stages such as closings, inspections, meetings with buyers and sellers, etc. So you need to always stay on top of your budgeting.

Your object, of course, is to make money. A budget can keep you on track. Even if you have to pass up a few good deals, there will always be others.

Think smart, plan ahead, and make sure your real estate budget is a priority.

There are a lot of definitions of what is exactly a fixer upper. Sometimes it can be a house not in completely move-in condition but only needing minor repairs and touch-ups. It could also be a really run down house with a leaking roof, foundation problems, and major work needing done.

Although buying a fixer upper can scare some people, it is also a good way to get into a bigger and better home in a better neighborhood for just a fraction of the cost. You would just have to be willing and financially able to make the necessary repairs. These houses are also good for real estate investors as they can result in larger profits when turned over.

If you are looking for a house for yourself or for real estate investing, don't pass up looking at the fixer uppers. Sometimes you can get a really good deal on them and get a house that you normally could not afford.

If you do decide to look at fixer uppers, it is a good idea to get a contractor to go with you to give an estimate on the cost of repairs. Sometimes it might not be feasible or affordable to get the fixer upper and it is better to find out sooner than later. Any repairs will decrease your profits as an investor, though sometimes it will be worth it financially in the long run.

Be flexible when you are house shopping and you might find that 'diamond in the rough' and make the best deal of your life. You might also get stuck with a lemon that had hidden problems that you weren't prepared for. So be careful and get an expert's opinion before buying a fixer upper.

If you want to do something on the weekends to boost your income, you could try some rental property real estate investing.

Make sure you allow enough time to manage your rental properties once you have them. This could involve maintenance, rent collection, etc. If you can only do it on the weekends, then organize your weekend time to include anything that needs to be done concerning your rentals.

For part time rental investing it is better to get properties that do not need a lot of repairs. As you will probably be working a regular job during the week, you don't want to spend all of your free time bringing a property up to par.

It can be very profitable building up your weekend rental properties business. This will give you some streams of income while allowing you to continue your full time job. Eventually you may find that your rental property income is surpassing or equal to your day job income.

Many people watch people flipping houses on TV all the time now. Have you ever wondered if you too could flip houses and make money in real estate?

Every weekend you can watch the house flippers as they go through the joys and the pitfalls of finding properties that are undervalued and just waiting to be rehabbed to turn a good profit. There are a lot of problems a house flipper can encounter and sometimes that can spell disaster for a first time house flipper.

When you see a property that is rundown or just needing a facelift or a little TLC, do you picture yourself buying and fixing up this property and making a profit? If so, you may have the heart of a house flipper.

Of course, there are many things to consider when thinking about going into this kind of business. The first obstacle is where you will get the money to purchase the property and restore it. There are many ways out there to finance real estate such as mortgage financing or using creative financing to buy with no money down. You need to study and learn as much as you can about real estate, buy some books or take a good real estate course, talk to mortgage companies or realtors, talk to some banks about hard money lenders. You need to have a good understanding of how the real estate market works before you make that first purchase.

Then there is the question of what if it doesn't sell right away after it is rehabbed and ready for marketing. Are you having to pay a monthly mortgage payment during the time it takes to sell? You need to be prepared to pay monthly expenses while the property is on the market. One way to offset these monthly expenses is to rent the property if it does not sell in a reasonable length of time. This way the renter is paying the expenses and you will have some money in your pocket and a house that has equity building in it every day. Not too bad a deal!

If flipping houses sounds like something you think you could do, then get out there and start learning, learning, learning all you can about real estate. Foreclosures are a good way to get started and the market is flooded with them at this time.

After you have flipped your first house you will see that it is easier to do your next, and then your next. If done wisely you could be on the road to financial freedom before you know it. Just remember there are pros and cons to this business and you need to be prepared for any eventuality. Doing your homework first will be the most important part of becoming a real estate investor. Once you feel you are well prepared, then step on out there and flip that house!