subject: Real Estate Investors In This Market [print this page] Investing in just about anything in this economic environment is risky, but when dealing with real estate investors, you should know what he is looking for.
Real estate is not a liquid investment. So an real estate investors may need to hold on to his investment for years before he may see a profit. If he finds himself in a bind and he needs to sell the property quickly, he may very well sell at a loss.
But there may be another idea in mind. You can make money with real estate in several different ways if the cards are played right. If you buy an apartment building and most of the units are rented, you can pay your mortgage with the rental payments, and you may even make a profit. You would need to be sure that the property has been well maintained and does not need extensive repairs.
Flipping is also popular, but it depends on the state of the market as to whether or not it will work. Flipping is when an investor purchases property for a very low price, usually from a seller who is in financial trouble, and then the investor sells it for much more, very quickly.
In malls and some shopping centers, the investor owner may collect rent, as well as a piece of the businesses that rent from him. It would be negotiated in the lease before the business moves in.
Increases in rent are pretty normal for apartment tenants, as well as for commercial tenants. In a commercial lease, however, the contract may be for up to thirty years, or more. In the first couple of years, the amount of the rent may not increase, but then in years three, four, and five, for example, it may go up a percentage. Then in year six, seven and eight, it will go up again. These increases are called bumps, and the amounts are usually predetermined before the beginning of occupancy of the space or building. Another investor, meanwhile, may find this investment attractive. He may buy it just to have a decent income during those years, while the value of the building increases, as well.
real estate investors usually know what is happening in the housing and commercial markets, in order to know what to invest in next. If they are interested in another state, they will also keep an eye on the market there, so that they have a feeling about when to buy and what.
