Real Estate Investment Strategies That Yield High Returns

Over the past decade, many people who were actively involved in real estate had made good returns. This is not surprising as properties values tend to be on the rise over a period of time. They are not as volatile as other investment such as the stock market for instance. However, the question now is… Is it still a good time to invest in real estate now since the mortgage or housing market was hit by a crisis?

Not many people believe it but the answer to the above question is yes. Well, because the price is low now hence it is a good time to buy. The most basic principle of any investment is to buy LOW and sell HIGH. But, unfortunately most people don’t apply this principle.

It is the same if you were to invest in a portfolio of stocks for your retirement. In order to get the best return, you want to make sure that you are buying stock at its intrinsic value. Unfortunately, 95% of investors don’t follow this principle, they are after those hot and high-priced stocks instead. This is a mistake because they are overpriced. That’s why so many people lose money when there is a financial crash because those overpriced stocks will also be crashing down (back to their intrinsic values).

So, the same principle applies when it comes to investing in a real estate. Buy when the price is low to get good return in the future. Of course, you must be willing to hold it for 3-5 years till the dust has settled and your investment will rise in time.

But there are several strategies you can use for property investment.

Flipping property is one strategy in which you buy a property by paying a holding deposit and then try to sell it before having to pay the balance. For example, let’s say you find an off-plan property up for sale from developer for $185,000; the completed property will be selling for $200,000.

You pay a 20% deposit (which is $37,000), with the final balance of 80% ($148,000) due in 18 months when the property is completed. Let’s assume that you have picked a good location and the property goes up by 20% over the next 18 months. So the property is now worth $240,000.

Let’s say you manage to sell the property for $220,000. You pay off the 80% balance you owe and you are left with $72,000. This gives you a NET profit of $35,000 in 18 months and remember you only had to commit $37,000 initially. This is a return on investment of 94.5% over 18 months. Where can you find an investment that can give you more than 90% return in 18 months?

Another property investment strategy is Foreclosures. Many foreclosure prices are significantly lower than the market prices. So again, you are applying the principle of buying LOW and selling HIGH. However, this strategy often requires you to have a substantial cash outlay. You must also perform proper due diligence when researching foreclosures. Are there any other additional liens against the property other than that of the foreclosed note?

Real Estate Investing Strategies For Women

The best investment strategy I have found for women investors, and this also works for any investor as well, is to have a team of experts that are working with you. Your team should consist of your attorney, accountant, Realtor and property manager. You know the old saying,” two heads are better than one”? Well when it comes to real estate, three or four knowledgeable heads are what you need.

Especially if you are new to real estate investing, it is smart to work with experienced advisors who can help you crunch the numbers and recognize a good opportunity. Now more than ever, you must make good quality investments and not worry about quantity. I also recommend working with a coach or mentor and joining real estate investment club. Networking is important because you can learn from other investors and pick up some good investment strategies.

Women hesitate to invest in real estate because they are afraid. One of the most common fears is thinking that you need a lot of capital to get started. You do need some money to start; but for those novice investors lacking a down payment or with credit issues, a lease option or master lease option strategy is a good way to get started.

Since there are so many opportunities right now to buy affordable properties by investing in short sales and foreclosures, women have many options to consider. Women also think they don’t know how to negotiate. This is not true. Women are great at getting what they want. They have a softer approach and many times that works in their favor when negotiating, especially in today’s market with distressed homeowners. Women tend to be more sympathetic. Many women I know have great success with distressed homeowners and end up negotiating for homes way below market value.

Since women like to enter into relationships, this is a tremendous asset to women investors. People like to do business with them. This is advantageous when you buy and flip properties. You want to establish a pipeline of buyers that you can count on when you find a good deal and you want to flip it. Women should consider investing in today’s market because market conditions are perfect right now.

Smart Investments Deserve Smart Finance – The Investment Property Loan Portfolio

In the past decade bricks and mortar have surprisingly been one of the more glamorous forms of investment globally. When compared against the volatility of the stock market between 2000 – 2005, property has delivered excellent returns while securing the investor a prize that is more tangible than stocks. For lengthy periods in the 1980s and 1990s, investors lost the enthusiasm and to some degree lustre for UK property especially when growth performance was measured against technology shares. However when the stock market suffered in 2001 and 2002 UK investors moved to the safety of property and residential and commercial property came back into favour as it is a tangible asset. The investment property loan portfolio considers the investment finance (loan) sourcing for property held within such portfolios.

Some would argue that property has reliably been a smart investment over the long term. However smart finance for strategic property investments and portfolios has not always been readily available to smaller investors. Secured loans and second mortgages have become the mainstay of new finance supporting new property portfolio investments. New residential buy-to-let investments have become very trendy in recent years in support of entrepreneurs building such portfolios. Commercial property as a secondary property investment has also been delivering strong yields and remains a good mix in the investment property portfolio.
Investors continue to switch equity or loan funds into what they now believe is a safe, consistent rewarding sector. Futhermore, many investment funds now boast double if not triple-digit returns consistently over three, five and ten year periods.”

Buying and investing in property is a subjective science but smart investments are derived from smart research into the type of property, location of property, demand for property and calculated return on the asset. Just as important is the source of finance and as stated in the title of this article “Smart investments deserve smart finance”.

A smart investment property loan is one that factors in the key points raised earlier but also considers the short term and long term cost of financing beyond current interest rate charges. When considering the cost of finance (COF) investors should consider the up-front cost of purchasing properties within the portfolio and ensuring there is sufficient equity within the portfolio to absorb challenges to repayments caused through occupancy gaps, unplanned maintenance, interest rate rises and any negative property price changes. Furthermore smart investors should seek flexible finance without expensive sting in the tail exit penalties and plan to swap sources of finance to maximize cost-effectiveness as financial institutions offer promotions.

The strategy of the investment: Most important should be the strategy of the investment. If the loan period for the investment is for a two-year period, then plan for two-years. You can always review after two years and change your strategy. If the investment is for a ten-year period loan, then plan for a ten-year period. You can always review this at the mid-point of 5 years. The key point is to plan to be successful. If you lay out your strategy and cost models and set your realistic goals out from the outset then you will be able to manage the expectations of returns.

Smart use of pensions enabled through recent UK government initiatives with SIPPS may also be a good source of affordable finance. Commercial property can now partially be used as part of retirement planning. Self invested personal pensions can invest in this asset class which brings a number of financial advantages. An example would be where rental income is not taxable when it is paid in to the SIPP and property is not subject to capital gains tax when it is within this structure. Furthermore, it may be possible for a number of SIPP investors to club together and acquire property thereby allowing investors to buy larger properties effectively. This grouping is referred to as a property syndicate whereby individuals have a share of all costs but also returns such as rental income and capital appreciation in proportion to their share of the property.” The risks when forming syndicates are typically lengthier commitments, less flexibility with the investment in terms of moving assets and the big risk of one the SIPP investors dying or differences in the investment strategy.