“As an investor, are you really prepared”?
The Investors Tune Up
Exactly what is Real Estate Investing?
“Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.” – Wikepedia
With 2016 behind us and the new beginnings of 2017 here at hand, many have contemplated things that they could have done differently in 2016 as an investor, and plan to make changes for the ushering in of 2017. I must admit that I have! We all know far too well the many obstacles and hurdles associated with real estate investing. Some experiences may enhance your real estate investing pursuit while others may place paralysis on any further real estate investing. As a major contributor to the Baltimore, Maryland real estate market, I have found the need to provide my spill on the subject matter as education to the newly introduced investor and as a refresher course to the well-seasoned investor.
Now we all know there are tons of ways to become involved in real estate investing. Finding your exact method takes time, experience and ideally mentoring. However, for now I would like for us to focus our attention on the 3 most common means of real estate investing; which for some time has proven to be investing fundamentals, and which I sometimes refer to as the real estate investing triangle.
Buy and Hold
This real estate investing method is most commonly practiced by long-term real estate investors/landlords. The rationale of the Buy and Hold method is to acquire a property that perhaps needs a minimal amount of work or maybe no work at all, rent the property and over time the property is paid for by the unit’s cash flow. The application of this method is different depending on the property’s acquisition. For example; Some Buy and Hold investors may acquire a property that needs a substantial amount of work however the property is pleasantly priced. In this scenario, the investor is more than likely investing in a community where there is property appreciation that will result in equity increase and after repair value to the investment.
Fix and Flips
Despite the over-saturation of reality TV propaganda for the past years, fixing and flipping does follow a predictable and true path of creating capital gains only if the strategy is performed adequately with as much precision as possible. If this method was as easy as reality TV proclaims it to be, we would all be rich! The general rule of thumb is to acquire an investment property with “enough meat on the bone”, meaning enough equity that allows for the total renovation costs and remarketing of the property to an end-buyer at the (ARV) retail value. The returns from this strategy are all worth the efforts once the property is purchased, but trust when I say that this is one of the most complexed methods of real estate investing. I encourage all fellow investors to do your homework and due diligence on your subject property before becoming “married” to your investment. I use the terminology “married” for the simple fact that an uneducated property purchase can result in a property resting on the market and an investor owning the property for quite some time. Keep in mind that no amount of over improving will dig you out of a lop-sided deal. A Fix and Flip investors goal is to buy low, make necessary repairs or renovations, and sell for the best market price allowed based on the area and property comparisons asap!
Wholesaler / Wholesale properties
Wholesaler’s usually find their market by seeking out distressed residential and commercial properties, placing them under contract with the legal owner, then the contract is sold to an investor for a profit within reason. The goal of the wholesale investor is to become the advocate on a non-traditional real estate transaction where either a Title company is used to facilitate the transaction or a real estate attorney. This method of real estate investing can prove to be an effective strategy to getting started for the new investor or become standard protocol for the savvy investor. In this deal the investor uses literally little to no money but profits greatly from the arrangement. Unconventional yet still proven effective, legitimate and a capital builder. This real estate transaction is frowned upon and deemed unethical by real estate professionals that are licensed and banks however, these transactions are necessary components of the entire real estate economy infrastructure. Imagine a real estate market where the well-established conventionalist never pays any attention to the distressed and only the highly sought. Disturbing right! In my opinion, this method creates opportunity (Jobs) while contributing to the overall real estate market infrastructure. “Keep wholesaling alive!” - Ross Sanders
Locating Investment Property Opportunities
Truth is, there are a variety of platforms and ways for investors to source leads for investment property opportunities. What works for one investor may not be suitable for the next however, the opportunity is present. We live in a push-button society where simply having an internet connection can lead to opportunity. Some internet based platforms are:
· (MLS) – Multiple Listing Services
· Zillow, etc.
More Formal methods:
· Foreclosure Auctions
· Networking with local wholesalers
· Your very own property search
· Bandit Signs & Direct Mailings
· Banks & Lenders
· Tax Liens, etc.
Considering getting more involved?
If you have taken the time to read this material and need expert advice or interested in (JV) joint venture partnerships, Bellvue Management Group is here to comprehensively assist with all matters associated with real estate investing. Feel free to visit us on the web at https://www.bellvuemgmt.com or email us at email@example.com .
About the Author:
Maryland Property Specialist / Investment Advisor
Veteran commercial & residential property specialist with over 15 years of Maryland real estate experience. Progressive, decisive and versatile strategist, known for innovative insightful leadership capabilities and success in generating solutions to a diversity of demanding Maryland Real Estate ordeals. Solid track record of transforming inefficient properties into passive profitable assets through revamping operations, intensive renovation projects, and effective marketing efforts. Qualification experience includes individually managing a portfolio of 220 units consisting of Single family residences, (MFD) Multi-Family Dwellings and Commercial mixed use.