As far as real estate is concerned, there are countless articles being written and stories being told of how sluggish the industry has become and that it is only on its way to getting worse. Well that may be true for the cynics and the skeptics that of the proverbial 'the glass is half empty' mentality.
The eternal optimist or business opportunist, on the other hand, would look at the same situation and find some way to use it to his/her advantage. With so many homes in foreclosure, home prices taking a nosedive, and sellers eager to rid themselves of less cost effective properties, why not invest in real estate.
And if you are one of the thousands of individuals who actually fall victim to cut-backs and lay-offs, you are now in a positions to re-think, re-group, and re-invest your time and energy in yourself. Not that unemployment is a good thing in any regard, but having that extra time on your hands just may be a blessing in disguise.
Think about how much time it will take to find another job or even begin a new career. Investing in real estate is entirely up to you. Whether you choose to do it as a full time career or work at it part time while looking for other work, the time commitment is yours to make.
With the real estate market as it is today, there are a variety of tips that most people are not aware of. Whether you are a well seasoned investor or relatively new to the industry because of circumstances such as the previously mentioned or of your own accord, one theme that should remain constant throughout your real estate career is positivity. Maintaining both a positive attitude and cash flow can only lead to inevitable success.
If you strive to maintain a positive cash flow you are going to want to focus on investing in cash flow properties. It all comes down to doing the research and finding out if a particular home or property is going to be worth both your time, effort, and money. A little bit of homework goes a long way.
Not having much money to start with is often a deterrent to those who are new to the whole world of real estate investing. If this is the case, you might want to consider working with a partner.
A joint venture with another individual, especially one that has some working knowledge of the real estate industry is a great way to both get acquainted with the industry and share the potential wealth. Selling half of your interest in a property to a partner to cover any negative cash flow is also an option that you might want to exercise, especially if you are just getting started and do not have much money to invest with for a bigger and better deal.
Other ways to work with little or no cash up front is by working with the banks. They are not the enemy and they also hold the key to a wealth of knowledge in regards to homes and properties that are available. Most banks are not granting loans as eagerly as they have in years past, so consider getting a signature line of credit instead.
Banks also have many homes and properties they own (REOs) that they are simply looking to get rid of. Buying discounted notes on real estate and selling them or trading them to other investors could also be very profitable.
Enlist the services of your local realtors or go straight to the organization regarding government owned properties. For example, you can ask for a list of FHA/HUD or VA homes or properties that are available in your area of interest. Assuming the payments on an already existing conventional loan, especially one taken out prior to 1978, could cut down your investment costs immensely. Also, re-negotiating the loan and structuring lower payment over a longer period of time could also cut costs for a greater short term positive cash flow.
Rentals are another route to take. Many people are opting to rent out their homes, as they are not able to sell them and do not wish to lose them to banks and creditors. Investing in a home and becoming a landlord in a steady flow of cash in your pocket. The renter could essentially pay down your loan amount each month if the numbers have been established correctly.
Another option to consider is offering a tenant a lease with an option to buy, not only could you charge a greater amount of rent each month, but the new occupant will probably be more willing to take on the responsibilities of maintenance and repairs associated with the home or property.
Always expect the unexpected. Suppose you end up buying a house with the intent of flipping it and selling it relatively quickly, and find that it is not selling a quickly as you had hoped. Using this home as a rental can also be beneficial to you and your pocket.
If it is not selling as a vacant home, your may be able to market it to investors in search of landlord opportunities. You could turn the tables on this dilemma and sell it as an occupied rental, where the potential buyer already has guaranteed tenants paying a monthly rent.
When structuring your initial agreement, there are a variety of contingencies that can be incorporated that will help you financially. Make sure that you include the option of having the right to extend any balloon payment terms you might assume in the deal. Also, you could negotiate terms and conditions offered with owners offering financing through deferred payment notes.
For example, a stipulation of this type might include that payments do not start of one year from the time of closing, where during that year the seller is responsible for financing. It may sound unconventional, but it is definitely doable. It is always a good idea to keep time on your side.
Maintaining a positive cash flow is basically a balancing act. Investing in real estate can brings with it the possibility of a great profit margin, but as any wise investor will tell you the possibility of great loss also exists. Anticipating both will give you an edge on any decision, real estate related or otherwise.
After taking all of the facets of the deal into account and doing the math, if the odds are in your favor, make the deal. The most successful deals are the ones where the potential profits outweigh any necessary expenses and give you enough of a profit to go after bigger and better deals.
Jeff Adams is a full time investor who has done over 350 deals and is a leading expert in the buying and selling of real estate. For more information visit http://www.FreeForeclosureCourse.com or sign up for a free seven day e-course at http://www.RealEstateWebProfits.com.
Tags: finance, real estate investing