Investment Strategies

Investment Strategies
April 11, 2013

The stock market is very unstable… If you’re lucky, it’s up, but you never know when it’s going to go down. Real estate investment, on the other hand, is very stable; and with all the foreclosure listings available in today’s market, the opportunities are endless. If you’re ready to invest, it makes sense to think about starting your real estate investment portfolio.

Because you’ll be spending your hard earned money, be sure you have a strategy in mind; don’t just buy up all the cheap properties you find. Here are a few real estate investment strategies to get you started.

One investment strategy is to bargain shop. When you’re buying a car, you look around to find the best price, right? Well, do the same thing with your properties. Shop around, make sure you evaluate the investment before you make an offer. This investment strategy is a popular choice now, especially because of all the foreclosed properties. The best bargains are properties priced at 20-30% below market value.

A foreclosure auction is a great place to begin your search. Foreclosure auctions are put on by banks, whose only goal is to get rid of the bank owned properties as quickly as possible. They aren’t interested in making a profit because their only concern is getting cash for it.

Another popular strategy is to purchase properties at their current market value. How can you make money this way? Well, you don’t buy just any house…look for one that has unrealized potential; something that you can add, fix or renovate to increase the property’s value. If you choose this method, the general guideline is that you should be able to increase the value by 20% within 6 months of purchase.

An investment strategy (if it could even be called a strategy) that you should avoid is to purchase any house with the expectation that its value will increase. Many would be real estate investors make the mistake of assuming that a home will always appreciate, so they buy properties then sit on them and wait. It’s important to do your research; there are so many factors that affect the value of a property: location, other sales prices in the area, etc. As with any investment, always do your research.

At Realnet, we are experts when it comes to real estate investment. Whether you just want your investing questions answered, or you want a short sale negotiator, we can help!