Real estate investment strategies have undergone major changes over the past four years. Before the banking crisis and recession, many investors were making huge profits by rehabbing distressed properties and flipping houses. Today, investors are using distressed properties to generate rental income or provide creative financing options.
The first step to real estate investment success is learning about the market. Investors should invest in a variety of investment properties, including residential, commercial and vacant lots, as well as real estate notes and land contracts.
Residential real estate can be used as rental properties or offered for sale. Many investors are offering innovative financing strategies to attract buyers who do not qualify for bank financing. Popular financing options include lease purchase option agreements and seller mortgage repossessions.
Commercial real estate includes a variety of properties such as condominiums and apartment buildings, retail stores, warehouses, and office buildings. Investors often buy commercial properties with other investors or investment groups to cover the costs and management of investment properties.
Commercial real estate has the potential to yield high returns as long as investors evaluate market conditions. When business investments bring local jobs or improve properties, energy-efficient technology such as solar panels or other green energy investors can receive tax incentives.
Investors often look for bank-owned properties because the value of this type of realty is often below market value. Bank-owned realty includes all types of properties, from mobile homes to gritty high-rise apartments and industrial parks to golf courses.
Finding residential and commercial bans is relatively easy. Using the services of a realtor will speed up the process. Agents can access the Multiple Listing Service (MLS) database to quickly find properties for sale.
After banks take over their assets, they are put up for sale through public or government auctions. If the property is not sold at auction, it will be returned to the bank. Banks then sell the foreclosures through their foreclosure departments or local realtors.
Generally, properties held by banks are worth more than properties sold at auction. However, banks will remove liens and judgments in order to sell the real estate as pure title. Buyers can book quickly and move forward with preparing the property for sale or rent.
Many investors are buying homes through the Fannie Mae Homepath Mortgage program. In addition to selling homes at discounted prices, Homepath Mortgage offers low down payment requirements and special financing options for individual buyers and real estate investors.
Many Fannie Mae properties are eligible for grant funds through HUDs Neighborhood Stabilization Program. NSP grants are available to improve properties located in areas with high foreclosure rates. Eligible investors can receive up to five NSP grants.
Investors investing in commercial real estate should learn about federal, state, and county real estate laws. Commercial buildings must comply with the Americans with Disabilities Act and be accessible for commercial use.
Although the real estate market continues to trend downward, there are still plenty of solid investment opportunities. Investors must be aware of market conditions and be able to change strategies when necessary. Otherwise, you will quickly become another real estate statistic.