What does a Real Estate Investor Look Like?

Most people believe that their home is the largest 'INVESTMENT' they will ever make.  But I don't believe that owning a home is the same as investing in real estate.  Your home is your home - and you pay for it every month.  Now, it may pay you back at some point down the road - and many people have indeed profited from individual home ownership - but the fact remains that on a month to month basis, your home is where you live and not an investment.

So, does that mean that real estate investing is only for the rich and powerful?  Heck no.  Here are 3 ways that the average Joe can make some money in real estate today.

Buy Low (presumes that you have the time frame to be able to sell HIGH later) - Today's real estate market represents an opportunity to do just that.  With the high volume of foreclosure properties on the market today it IS possible to buy homes well below the "market" price - and the "market" is bouncing along the bottom now anyway. Making a purchase that gives you instant equity in the home, and having the ability to hold onto it and sell after the engine of appreciation provides you additional profits is a good investment strategy, wouldn't you agree?  Now, what you DO with this property can make you more money too (live in it - rent it - flip it).  Owner occupied properties purchased below value at today's interest rates (4.5% for 30 years!)

*** Too many people have been the subject of foreclosure and short sales.  Regrettably, that has placed many really nice, responsible people into a situation where they cannot make another home purchase for a few years in the future.  Remember, many of these people had one bad month or some other set of circumstances beyond their control.  They would be EXCELLENT renters - and they want to live in a decent, single-family type home.  Many of them have the income to support that too!  That sets up the potential for:

Creating positive cash flow - Buying a rental property at a great price, at today's interest rates (remember, down payment requirements for investment properties are going to be higher than owner occupied) could give you that opportunity.  Example:  Duplex property - Sale price $220,000.  2 bedroom side - rents for $700 / month; 3 bedroom side rents for $950 / month.  Seller pays some utilities (about $26/month expense).  With 25% down (about $55,000 including closing costs) and the monthly payment (with taxes and insurance) is about $1200 a month.  Net positive cash flow of $450 a month.

IMAGINE owning 4 or 5?  Hey - hold them long enough and they're paid off which makes ALL the cash flow positive!

Flipping properties - The hardest thing to do with out a team of folks to do the repairs!  But there are certainly some challenged properties on the market which can be picked up for a song.  Putting some hard work and materials in (if you can do so cost effectively) can net you a great ROI!

Purchased for $75,000 - $28,000 in repairs and upgrades - Sold for $120,000 - Account for carrying costs, closing expenses, commissions...Net profit of $12,000 in just over 3 months!

So, what does a real estate investor look like?  Look in the mirror - with the potential for annualized returns of over 7-20% possible in this market, the long term opportunities...it may make more sense than that roller coaster stock market!  Ask a real estate agent you like and trust to help you determine if its right for you.