The savvy real estate investor will find several ways to make money from a residential investment property. The purchase and hold strategy relies on the house gaining in value over time. The real estate investor buys the home at a reduced price and over time the home value increases above the loan amount. At that point the real estate investor may resell it at a profit, or can refinance the loan and pocket the equity. The purchase and hold method is particularly appealing in the current market with a flood of deeply discounted foreclosed homes waiting for buyers . Investors are able to purchase great houses at a small percentage of their value, and feel comfortable with the eventual profit potential. If this is your chosen strategy, you must be financially prepared to cover the mortgage costs for the length of the hold period, until market conditions favor the home’s resale. If you are buying residential income property with the plan of marketing it as a rental, the primary thing to keep in mind is that you need to select a home in a neighborhood that will support the rent. Ideally, the monthly rent will pay for all the expenses including the mortgage , taxes, insurance and maintenance and still show a profit, so the real estate investor has a positive cash flow. Selecting the ideal property is critical to success. With residential investment property tax deductions are the equivilant of money in your pocket. Each dollar that the investor saves is really a dollar earned . There are tax write-offs allowed on a number of items, as well as depreciation of the property itself. A residential investment property can be an excellent investment for building wealth provided the investor makes some smart choices. It all depends on choosing the right house at the right price . You won’t have to overextend yourself financially to get into the residential investment property game. A careful strategy and thoughtful selection of the property will help the investor reach their dream.
Posts Tagged ‘real estate investor’
Choosing a Moneymaker in Residential Investment Property
September 21st, 2011Why You Should Consider Pre Foreclosure Homes
May 23rd, 2011There is so much opportunity for the real estate investor to profit in the purchasing of pre foreclosure homes. A home goes into pre foreclosure if the homeowner has failed to keep current on mortgage payments. The bank or lender can then file a notice of default, a public record, and the owner has to get payments up to date to prevent the house from being sold by a trustee or at an auction. In the period of time between the financial institution filing and the sale, the homeowner still maintains control of the home , and this is the ideal time for the real estate investor to make an offer on the property . The current owner should be more inclined to negotiate because selling the property will allow him to settle debt with the lender and possibly walk away with a little equity and no foreclosure to mar his credit . The real estate investor, as the buyer, is allowed to inspect the property and can notate needed repairs and renovations, which will impact the offer on the property . The real estate investor has a rare chance to get a quality property at a deeply discounted price. Consider lining up financing with a lender who has experience with pre foreclosure homes, and perhaps adding additional financing to pay for the necessary repairs documented during the inspection. Pre foreclosure homes are public record once the lender has filed a notice of default, so they can be identified through records at the county courthouse. Because this kind of research is time-consuming and tedious , subscription services offer lists of pre foreclosure homes for a small cost . The real estate investor looking for this niche type of property will find the list well worth the fee, since it helps them to locate properties quickly and supplies all the necessary basic property information . The number of pre foreclosure homes is expanding in this weak economy, so the real estate investor should be able to find and buy an excellent investment property.
Self Directed 401k Finds Funds for the Private Money Lender
May 4th, 2011A very rarely talked about strategy for obtaining sizeable amounts of private capital is the not so well known self directed 401k group plan. Although individual employees have very limited control over their investment options, business owners can move their 401k to a company that offers self-directed 401k options. Those funds can then be invested in real estate notes and similar investments opportunities . Even small companies can be a powerful source of capital as a private money lender for your real estate deals , and the asset-backed investments that you will provide them with have the power to create an excellent win-win situation .
If you can get even a small company with a limited number of employees to become a private money lender for your deals, you also open up the opportunity of establishing relationships with all the employees of that company and providing them individual opportunities to invest in your deals. The employees will frequently have more money in their individual retirement account or savings than they do in their self directed 401k account.
Business owners that offer 401k benefits to their employees are often looking for the low maintenance by selecting a 401k plan that is simple to setup and not think about. These plans usually offer a few mutual funds to choose from, which makes the employers involvement in the maintenance of the 401k plan very minor . In order for the business owner to convert their current plan to a self-directed 401k model, they will have to be open minded and agree to do a minor amount of hands-on work to move the funds to you and ensure investment security for their employees by fully understanding your investment opportunity available as a private money lender.
Read up on how a self-directed 401k works and request some brochures from a company that offers them. The brochureshould sell the idea for you . You then explain your business and the opportunity you can provide the participants . The brochure and the provider you refer the prospective lender to will be able to handle the paperwork for the conversion.
