Three Real Estate Investment Ideas
By Steve Gillman - 2009
The three real estate investment ideas below are meant for
tough markets like the current one (I am writing this in 2009).
It is unclear whether real estate values will continue to fall
or have already bottomed. But in either case having the right
approach limits the risk inherent in falling prices and the slow
sales times that some areas are facing.
1. Infrastructure Changes
Basic infrastructure changes can radically affect prices of
homes and real estate in general. For example, I recently read
a story about an investor who bought houses in an area soon to
be serviced by a new commuter rail line. People living there
would soon have easy access to a large city center, and the value
of real estate there went up 50% in about a year and a half.
Do you know of any areas where new roads or train or bus lines
will soon be established? If so, it might be an opportunity to
invest. On the flip side, before you make a real estate investment
check to see if there are there are any train or bus routes that
will be closing soon, since this could drive property values
lower.
2. Worst-Case Scenario Planning
When looking at a real estate investment try to think of all
possible problems you might face. This isn't just to help you
decide if it's worth the risk. It also allows you to make contingency
plans. What if the market softens by the time you finish fixing
up a property, for example? Maybe you won;t be able to sell at
a decent price. Will you be able to rent the house for a year
or two until prices rise again?
Think about how you can deal with any potential problem, and
take notes. Real estate is one of the more flexible investments
fortunately. A particular house might be sold, rented, leased
with an option to buy, sold with easy seller financing, rented
by the room, made into a duplex, or lived in until prices rise.
You should always have a few options available to you just in
case "Plan A" doesn't work out.
3. Fix And Flip Quickly
Acting fast when markets are uncertain is a matter of safety.
Houses are always expensive to hold onto in any case, and speed
reduces those costs. This can be important if you are buying
and selling a fixer upper during tough times, and selling as
quickly as possible can make a deal work if property values are
still falling. Here are a few real estate investment ideas for
fixing and flipping homes quickly.
- Create a plan (and take notes) before you make an offer
on a property.
- A quick closing should be one of the conditions in the offer.
- Make arrangement with contractors so they can start the
day you close or soon after.
- Have a real estate agent and a marketing plan in place before
the home is finished and ready to sell.
- Get the property listed for sale and start advertising a
few days before the project is done.
- Set the price slightly below the market for a faster sale
(again, this saves you holding costs and reduces the risk from
falling prices).
In good times or bad real estate investment can be risky.
Look for and apply ideas that help you reduce the risk or gain
special advantages, like those above.
Here's one more idea: Diversify out of real estate. The following
page on the website EveryWayToMakeMoney.com has many pages of
ideas for doing that (and the site also has a section full of
pages with real estate investment ideas as well):
Diversified
Investments
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