Where to find Investment Real Estate
Investment real estate is a term used to defiine any kind of real property that generates income or is intended to generate income – rather than being used as a primary residence. It’s very common for real estate investors to own multiple properties, generating rental income and profits through price appreciation.
Common examples of investment properties are houses, condos, and multiplexes like duplexes, quadplexes and apartment buildings. These dwellings are used by investors to generate ongoing rental income from tenants. Investment real estate is also expected to generate capital gains, as property values increase over time.
If you’re considering investing in real estate, you should be looking for properties that produce a monthly return while minimizing the amount of time and cash you need to spend tending to the property. To find the perfect opportunities, research is required. Purchasing investment real estate requires liquidating one set of assets (stocks, bonds, CDs, 401ks, etc.) and converting it into a “hard asset” – real estate.
If you believe Forbes:
“All real estate is extremely high risk. Development of real estate, land, Tenant-In-Common (TIC) investments, private real estate funds, fixer uppers, etc., all have much higher risk profiles than just simply buying a nice established cash flow investment property. In many of those investments, you will never see a dime of your money again because there are just so many things that can go wrong! So if you want to own real estate, consider simply taking fee simple title in your own name – or an entity you wholly own – to the properties you purchase. In addition, you must do the proper due diligence, analyze, test, review reports, etc., to make a lower risk real estate decision.”
Most of that is bunch of baloney
When the kaka hits the fan (as it seems to be happening more and more often lately), people invest in hard, tangible assets – like REAL ESTATE. Saying “real estate is risky” is like saying WALKING is risky… and walking IS risky, if you’re walking on the highway or in a national forest with a large black bear population. How about walking in the ocean? Literally walking straight into the ocean?!? That’s risky.
So, yeah, if you jump willy-nilly into a real estate purchase with no plan to how it will generate long-term revenue, you’ll just be wasting your money. Of course, that’s not “risky”. That’s just stupid. So, in the grand scheme of things, real estate is NOT risky, but you CAN make stupid mistakes.
How do investors make money in real estate?
While there are a number of factors that go into developing a successful and profitable real estate investment plan, the fundamentals of real estate investing can be summarized very easily:
1. Cash Flow
Real estate property produces income from the rent its tenants pay. Whether it’s a condo, an apartment building, or a shopping mall, investment property generates income by leasing its space. Property owners may also incur expenses to manage the property, such as electricity, insurance, janitorial, POA fees, or property taxes, which reduce the return on investment.
Yeah… so, cash flow. Makes sense, right?
2. Appreciation
People need 4 things to survive in today’s world: Food, shelter, health and education. Good health, a steady supply of food and the ability to focus on educating one’s self all depend on having adequate shelter.
(*** It’s easy to see where we’re going with this.)
Real estate has intrinsic value; People must live, work, and shop somewhere, and there is a limited supply of property. Of course, those limitations are based on population density, jobs, climate, and other factors. If a population is steadily increasing in an area, then – with all other variables remaining the same – the value of real estate is guaranteed to increase as well.
As property values increase, there is a justification in charging more rent.
Now, common sense must prevail here. If you own an old house in an area of new construction, it may be difficult to find renters for the same prices of comparably sized dwellings. If you own older investment real estate, you may need to keep your rents a little lower. In addition, you should always be a little nicer than the local property management company.
The real secret to successful real estate investing is RELATIONSHIPS.
Development
Development is the business of improving real estate through the process of building, renovating, or improving through adding square footage.
Development is probably the quickest way to get the biggest return your investment real estate, and it’s a great “elbow grease” investment, since you can see a return through sheer effort.
Overall, land with a finished building on it is worth more than just the land itself, and a rehabbed building is worth more than a dilapidated one. Get some rent paying tenants in those dwellings and you’re sitting on money.
Where do you find Investment Real Estate?
The biggest challenge in investment real estate is actually FINDING investment real estate. Obviously, purchasing real estate at retail value is not the smartest idea, and some properties are better investments than others. Some properties like vacation homes, houses in bad areas, and college rentals require way too much time and management to make them good investments.
Examples of good investments are nice boring properties that stay rented for long periods of time to clean, credit worthy tenants. They take the least time to manage and, if you them fairly and with respect, you’ll find that those tenants will take even better care of your property.
Good relations with tenants will reduce hassles when problems arise – and problems WILL arise.
Nice, boring, wholly owned, well maintained, cash flow-positive properties make the best investments. They’re out there, but you aren’t going to find them on Realtor.com for a decent price. You need to do some hard work, research, read up, and make smart, educated decisions to acquire the best real estate investments! Or find a real estate wholesaler.
The Real Estate Wholesaler
Over the last half-dozen years, investors have been scooping up cheap, distressed properties like candy from a busted piñata. Now, though, competition has increased a lot in the investment real estate market, and those same investors have started writing books, as things aren’t quite as easy as the once were. That’s good for the rest of us who are eager to get started.
The best place to start looking for investment real estate is in the wholesale real estate marketplace. If you’re new to real estate investing, then the wholesale real estate investor will be your best friend.
Wholesalers are still investors, but they focus on quick returns on their investments. Quick returns are rarely LARGE returns. Wholesale real estate investors focus their efforts on foreclosure auctions, tax liens, estate sales & liquidations, inherited properties and distressed owners.
Once purchased, the wholesaler’s goal is to sell the property in 7 to 15 days. They have a contact list of fellow investors that they work with and who get first option on the properties, but this isn’t an exclusive group of investors.
Almost anyone can get access to the list of available properties a wholesaler has, but you need to know what you’re looking for so that you can find it. The key is to buy where the prices are still low, in cities with a lot of growth potential. In other words: Anywhere in Florida.
Best Places to Buy Investment Real Estate
If you’re interested in purchasing investment real estate, there are a few things to consider. The first of course is LOCATION. Location plays a vital factor in who you’ll be renting to. This also determines how much your first investment property is likely to cost and how much revenue it’s likely to create.
If you’re a Florida real estate investor or are interested in Florida investment real estate, then you’re pretty smart. Of the top 20 best markets to buy investment real estate, 8 are on Florida and located in and around Central Florida, including Tampa, Lakeland and Orlando.
This list was developed by RealtyTrak and based on sales price, mortgage payments, cash flow, returns, and purchase prices. These are areas known to have a good population density, decent job market, and above average growth coupled with lower than average home prices.
“We are at a stage in the economic cycle where job growth–and demand for housing–is accelerating in some markets,” says Ingo Winzer, founder of Local Market Monitor. “The types of jobs created are often lower-paying, most suitable for renters, younger people who are willing to move from somewhere else and who don’t want to own a house right now but might have a young family and would like to rent one.”