How To Be Safe With Investment Property
As a successful real estate investor, you must avoid potential losses that could quickly put you out of business
. Identifying and avoiding such pitfalls if therefore crucial to your real estate investing business.
The following tips will guide you to stay safe when buying investment property.
1)Buy properties with equity
This is a must. Avoid properties you buy at market value.
Do not expect the real estate market to improve any time soon and your market value to go up.
Houses are sitting on the real estate market with no buyers. You can even get highly discounted properties at deep discounts from banks, sometimes as much as 30%.
If you buy directly from motivated sellers, focus on those properties that have immediate equity even if you use creative means of financing such as lease options.
2)Know your area
Buying in the wrong neighborhood can mean you may have problems selling it, even if it has equity.
If you keep your properties as rentals, you will get better tenants in the right neighborhoods.
Focus on an area that is favored by most people. Can you live there? Would you like your kids to grow up there?
Is this an area that is growing and shows even better potential in the future?
If you answered yes, then this may be a good place to invest.
3)Is there rental demand?
If you buy houses to hold, you probably need to rent them out. Does your chosen area have a high demand for rentals?
If you cannot sell it right away, can you rent it out? In case of unforeseen circumstances, this will cushion against possible losses.
4)Think outside the box
Sometimes even with little to no equity, you could still make money if you did lease options, rent to own or owner financing.
If you get a property with equity and sell it on terms, you can make a profit right from the beginning.
Real estate laws have been changing recently, so consult an attorney for your real estate transactions.
5) Invest little money
If things go wrong, how much can you afford to lose? The less you invest, the less you can lose if things go South.
This applies whether you get a traditional bank loan or buy on terms.
6) Use private money
A ready supply of quick cash for your deals is a must for successful real estate investing. You have flexibility what types of properties you buy and how you finance them.
For instance, with a bank loan you cannot acquire a lease option property but can do so with private money.
Get a real estate investor website for seeking private money investors and actively look for them. Your private money website tells your story for you.
Once you have private money investors, the sky is the limit.
by: Simon Machcria
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