Real Estate Investment Success

Series Tip #1– Making Money With
Real Estate Investing
By Joel Teo

Are you losing money in all kind of speculative instruments
like share, bonds and forex and am wondering what asset class
to invest in? Why not consider real estate investment with its
traditionally higher yields as compared to leaving your money
in your bank account. This article will highlight four common
strategies that real estate investors use to make money in
property investment.

Money Making Method #1 - Purchase run down property and spruce
it up

This method involves finding a run down property in a good area
that you think has promise for resale and sprucing it up like
some of the shows where people do an extreme makeover on the
property. Bring along a good structural engineer or architect
when you do look for such properties so as to ensure that the
renovation works that you have to do will not be so extensive
that it does not become worth your while to purchase the
property. Since the property is may be rather run down, you
need to redecorate and repair it and then you can resell this
real estate for a much higher price. The key consideration when
investing in this kind of real estate is to keep your renovation
costs low but ensure that the basic utilities like the
electricity , water and gas pipes are in good working
condition. Thus this buy at undervalue and upgrade real
investment strategy requires good investment property valuation
skills and the ability to keep your costs low.

Money Making Method #2 – Find places with high rentals

Find areas with traditionally high rental returns that
outperform the national average and then spend time looking for
them and make money from the rentals. Here in this area of real
estate investment, spending some time to find the real estate
investment that is a bargain is a good idea so that you can get
better return on investment.

Some people do not seem to get it that high rental yields are
important to a real estate investor and think that most of
their customers would pay anything to get a winter residence. I
was at a property exhibition recently and spoke to a Spanish
Real Estate Agent and when I asked her what the Return on
Investment was on a piece of Bulgarian property that she was
selling. Not only could she not even understand the concept of
ROI but she even laughed off the question of rental yield when
I asked her. I am sure she is not alone in his mistaken belief
that people buy just because they like the real estate. Thus
rental yields or return on investment is critical when you
decide what type of real estate investment property to
purchase.

Money Making Method #3- Purchase foreclosed property

Most people will know that foreclosed property usually fetches
a lower price than the market value since banks are often eager
to sell at a price that covers their mortgages or sometimes they
just want to liquidate the property. Such properties tend to be
auctioned off and you can then resell them for a higher value
subsequently. However beware of hidden defects in auction
properties and always arrange for a visit down to the property
just to check it out.

Two people you should bring with you when deciding on a real
estate investment is your professional engineer and your
contractor. You want to check for hidden defects in your real
estate investment to avoid buying a defective property that
would cost loads of money just to repair. Thus purchasing
foreclosed property may be profitable if you find a real
bargain for your real estate investment portfolio.

Money Making Method #4- Cash Flow Investment

Robert T. Kiyosaki in his book explains this real estate
investment strategy. He argues that the best investment you get
is when you find a property at a bargain and then purchase it
with as much debt as possible and then generate a cash flow
from the difference between the monthly rent and the mortgage
instalment. This method is highly interesting and requires you
to really spend time looking for such a real estate investment
that fits in that criteria.

Remember that real estate investment is dependent on rental and
the higher the proposed rental the better your monthly cash flow
is. You could also purchase the property at a lower price and
this would mean that your monthly cash flow would improve. Note
that once your property is partly paid up, you can refinance
your loan and extract out some money and purchase a second
property and so on. Soon you would have multiple streams of
income from the purchase of one real estate investment
property.

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About the Author: Joel Teo is the owner of several websites and
takes a keen interest in real estate investment as part of a
larger investment portfolio and considers real estate
investment as a viable business model. For more tips in the
real estate investment success series go to
http://www.realestateinvestment101.info/Success_Series.html

Source: http://www.isnare.com