Smart investors can earn a living in ANY real estate market, and being a smart investor is not as difficult as it might seem. Here are a few practices for bringing home the bacon as a real estate investor, even if your real estate buddies shout that the sky is falling.
Practice 1: Foreclosure Auctions
You know why the media yells and screams about foreclosures? Because they sell for less than their MLS-listed counterparts, so when there are too many they can drag down the market. But they’ll ALWAYS sell for less, because there are so fewer buyers. See the entry below about buying real estate at foreclosure auction, and find a good discounted property.
Practice 2: Renovation
You don’t have to be a veteran contractor to renovate shells (though it will still save you money if you are). Fixer-uppers sell at a discount, because so few people are willing to take on the headache, which means you create equity by buying dilapidated real estate and improving it. You’ll need a bank or hard money lender who offer rehab loans, a solid contractor, and the patience & funding to wait a few months for your pay check. You might even consider buying a shell at a foreclosure auction and then renovating it, effectively creating a double discount.
Practice 3: Find Your Inner Landlord
Let’s be honest: being a landlord is not for everybody. It requires capital, patience, and comfort with a non-liquid, term investment. That being said, there’s no better way to thrive in a cold market than to acquire while it’s cold and unload a few years down the line when the market’s hot. And let’s face it: being a landlord is not without its perks, particularly cash flow spilling into your checking account each month (see below for maximizing cash flow through rental properties).
Make sure you have an airtight rental agreement, and (here’s where the business plan really gets strong) consider the following model: buy a shell at foreclosure, renovate it, and then keep it as a rental property.
You don’t need me to tell you that slow markets are the time to buy, and while you can still make money selling (see above), you stand to earn a lot more if you have the patience to wait. Play your cards right, and this slow real estate market could be the best thing that ever happened to you.
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