Savvy investors can make a profit in almost any market. An
investor must know where his profits are coming from before
entering a real estate transaction. Knowledge of exit
strategies is key to making a profit as an investor. To be
knowledgeable in real estate investor transactions, here
are some tools an investor needs to flip houses in any
market. These are the basics to profiting as an investor.
1) Wholesaling is the process of locating distressed
properties and selling to wholesale buyers. Many times the
investor has no money in the transaction. Quick profits can
be made by assigning properties to wholesale buyers that
you already have in place. Experienced wholesalers will
already have their buyers' list, which are just a phone
call away. The skill needed here is finding houses to put
under contract. Placing properties under a purchase and
sales agreement is a fairly simple process.
2) Owner financing is purchasing houses from owners that
will allow you to take over payments. This is a simple
process that allows the investor to think out of the box
and place a new buyer who normally cannot get financing or
is interested in taking over payments. There are 3 ways to
make a profit. First, profits are made in the down payment.
The second profit to be made is in the difference between
the monthly payment that the investor negotiates between
the seller and the final monthly cost to the buyer. And the
third way to make a profit is in the final payment when the
buyer closes out the sale if he gets financing. This is a
good way to have a constant income once you get several in
the pipeline. A good attorney or courses can be taken to
understand simple contracts to place buyers into an "owner
financing agreement." Consult with a local attorney to
check for any laws and regulations related to owner
financing agreements.
3) Lease option, also known as rent to own, is a method of
selling houses that investors use in flat or rising markets
to make a profit. Although done a few different ways,
investors purchase a home below market by having the seller
"owner finance" to the investor. Profits are made by
investors basically selling at market value to a buyer
"renting to own." Buyers usually will contract with the
investor to complete the sale in 1 year to several years.
Profits come from the down payment, sometimes in the
monthly payments, and the biggest profit is at the end.
Many investors do this and feed the pipeline, with the goal
of cashing out 1 or more a month as they set up their
systems. Profits are very reasonable and the buyer can make
$5,000 to $50,000 or more once the buyer decides to take
the option to purchase.
4) Retailing is the business of selling houses at market
value. It goes hand in hand with purchasing properties at
wholesale and rehabbing for resale for profits.
There are more methods for investors but these are the
basic principles of buying and selling houses as an
investor. Investors develop specialties and focus mainly on
one or maybe two different principles. The more
knowledgeable an investor becomes, the more successful he
can be in different markets. Make sure to abide by rules
and regulations of your state.
----------------------------------------------------
Andy Ford is a real estate investor who purchases, rehabs
and retails homes. His expertise is providing wholesale
properties to the public at http://gotcheaphouses.com/ He
also has access to bulk REO packages through
http://www.sterlingholdingsinc.com/
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