An Introduction to Real Estate Investing
There are a great many books and web sites devoted to real
estate investing out there, but most of them concentrate on one
specific area of investing. It's often hard to find a general
description of real estate investing, one that lists the various
real estate investing strategies and how to get started. That's
what this article will set out to do.
Before beginning, you must understand that real estate investing
is not a get rich quick scheme. Real estate investing can, and
will, make you wealthy, but it certainly won't happen overnight
and it will require work. As you perfect your technique and gain
experience, the amount of work needed to gain a lot of money
will reduce, but it will take effort and persistance to make it
there.
If you're completely new to real estate investing then the only
sort of investing strategy you're likely aware of is rental
properties. Landlording has been around since there have been
houses and people to rent them to, and it will continue to be a
wealth builder. In fact, most of the 'no money down' real estate
strategies you hear about still include rentals as part of their
plan. Still, there are other ways to make money from real estate
investing out there.
The next most 'traditional' method is to buy a fixer-upper, fix
it up, and then sell it for a profit. This is commonly referred
to as 'rehabbing' and is a very good way to make a lot of money
in a relatively short period of time. Most rehabbers won't even
look at a property unless they can make at least $20,000 of
profit, and this is usually within 3-4 months time. Rehabbers
tend to be experienced investors with available money, or have
partners who help provide any extra cash required.
But if you're just starting out you likely won't have access to
large amounts of money. One way to get involved in this area of
real estate investing without needing any money at all is to
'flip' houses to these rehabbers. What this entails is you going
out and finding these fixer-uppers, noting all the work required
to fix the place up. You then place a low offer in to the owner,
taking into account the fix up price and some built in profit.
Once you have the house under contract you then flip it to a
rehabber for a small fee. This can result in several thousand
dollars for you, without you having to spend a dime. 'Flipping'
properties can be a great way to start your real estate
investing career.
Another 'no money down' technique that's popular on the late
night infomercials is called 'lease optioning'. This is
basically a rent to own strategy that allows you to control a
property without ever taking ownership of it. It's a slightly
more complicated strategy that warrents its own article, but it
does allow you to make money in several different ways, each
without ever having to spend any of your own money. If you're
not put off by longer term investments then lease options are
definately worth more research.
There are other strategies that involve foreclosures and getting
the home owner to sign the deed over to you, but for now I'd
suggest learning more about flipping and lease options as
entry-level real estate investing strategies.
How do you find properties that would make good real estate
investments? Again, an entire article can be devoted to that,
but there are basically two ways: you go looking for them, or
you get them to come to you. The first way involves reading the
newspaper classifieds and scanning the Multiple Listing Service
(MLS). This is where having a great real estate agent is a must
- they can get you more details on homes than you can view on
the mls website, and can often let you know of great deals
before they even become available to the general public.
Having home owners contact you means setting up an advertising
campaign. This can involve placing ads in the newspaper, placing
bandit signs at strategic locations around town, starting a
direct mail campaign, etc. There are many ways to let people
know that there's a new real estate investor in town, and it
would be in your best interest to try each of them to see which
ones work best for you.
Whether you decide to go looking for deals, have them come to
you, or both, they key is to be persistant. Real estate
investing is a numbers game - most of the time you won't be able
to make the deal work, but every time you do it translates into
thousands of dollars for you. The more owners you talk to, the
more deals you'll be able to do, the more money you'll make.
I hope this article gives you a bit of an idea of what the world
of real estate investing is like. There's a lot to learn out
there, and all of it is very interesting. Find the area that
interests you the most, then get out there and start talking to
home owners. Don't be discouraged if you're getting turned down
a lot - just remember that when it does pay off, it will pay off
big!