Chapter 3: Simple techniques of investing in real estate

There are people who have managed to succeed as a real estate investor and make millions in profits. There are others who have not succeeded and have actually lost their investments and made huge losses. The difference between these two groups of people is in the techniques that they used.

Standing out from other real estate investors

Real estate investments are very popular due to their potential profitability. This has managed to attract so many investors to try out their hand at making a living through this kind of investment. However, to be successful, an investor has to find a way to stand out from the other investors. You have to find something that will distinguish you from others.

In addition, in order to find the right kind of property to invest in, you have to be really competitive. If a property presents a good investment opportunity, this means that there will be a number of investors who will be going after it. The seller will then have to evaluate what each investor has to offer so as to make a decision.

You need to ensure that you have something that will make the seller interested in your purchasing proposal. For instance, don’t just send a plain application. Make an application that stands out and tells the owner why you should be the one to get the property.

Try and attract the seller’s attention immediately. You can do this in presenting your buying proposal in a way that is attractive and stands out. If possible, ask the seller if you can meet and have further discussions. Most buyers normally ask the seller to call them but whenever possible; it’s good that you take the initiative and show your interest.

When sending your letter to try and get the seller intrigued so as to read it. You can do this by using an interesting envelope or making a good presentation that will be hard to ignore.

Remember, whichever strategy you adopt, you should never pester the seller. Make your application and wait. Don’t keep calling or arriving unannounced to see the seller. This may work against you.

There are so many people who may be interested in the same investment as you. It is therefore paramount that you find a way to stand out from all of them. Distinguish yourself in a way that will appeal to the sellers.

Research

One thing that you will learn from this Essential Guide is that you can’t be a successful real estate investor without being knowledgeable about the real estate industry. You have to do your research as this will help you in every step of the way.

When approaching a seller, you need to have adequate knowledge about real estate. If a person is selling their first property, they will have confidence in a buyer who knows their way around the industry. This seller is faced with something new that presents a lot of uncertainties. If you also appear clueless, they will not have any confidence in you.

You have better chances of forming a good rapport with a seller if you can offer him or her some guidance about the whole process. Build your confidence through research. This will also make you look more credible in the eyes of the seller.

Remember, you may have to portray your knowledge through your application letter. Keep it straight to the point so as not to lose the interest of the seller. You can offer some insight to the seller by telling them the options that they have. You should also try and explain to them why the sale will be beneficial to them. Ensure that the letter isn’t about you but about them.

In case the buyer contacts you looking for help, you have to be able to offer them adequate assistance. If you lie and then fall short of their expectations, you will not be able to get the property. Ensure that you research well and be ready to assist them whenever possible.

Rental properties

One technique of investing in real estate is investing in rental properties. You can find nice properties and then rent them out. You can charge a good rental fee that will help you cover all the expenses of the property.

This is one of the most popular techniques adopted by most investors. Being a landlord enables you to make a profit and have a steady cash flow. The rent can also pay for your mortgage payments thus relieving you of the burden of loan repayments.

However, you have to ensure that you get good tenants. A bad tenant may not be able to make the payments. They may also damage your property making it loose value and actually cost a lot more in repairs. This is the main risk of this investment technique.

You should also be prepared to invest time in this type of property investment. You need to touch base with your tenants and watch over your property. Some people may consider this as being tedious but nevertheless, it’s a requirement.

Investment groups

Being a landlord entails a lot of hard work. It has its benefits but there are also a number of hustles involved. For people who want to avoid this hustle, there is the option of joining part of an investment group. This is whereby a company buys the real estate property and then invites investors to buy parts of the properties.

In this case, you won’t have to invest as much time as the landlord in watching your investment and ensuring the property is well kept. The company does this for you. In return, you will have to give them part of the rent that you make each month.

An investment group still manages to make enough money to earn a profit and pay for the property.

Trading in real estate

Another strategy that has worked for a number of investors is trading. This is where you buy the property and then quickly dispose of it at a profit. Most traders buy the property very cheaply. They then fix it up to make it more valuable. They will then sell it off within just a couple of months and make a profit. In real estate lingo, this is called flipping property.

There are however some investors who simply rely on their negotiating skills. They negotiate and ensure that they buy a property at a very good price. They then use the same skills to get a higher price when selling the property. These investors don’t try to increase the value of the property. The just sell it off the same way they bought it.

Investment trusts

This basically involves the trading of real estate in the same way as the stock exchange. The trust is set to get investors to put their money to buy properties. When the prices of the properties go up, the trust will then sell the property on behalf of the investors. In addition, if an investor needs quick cash, they can easily sell their property very easily through the trust.

For this technique, investors can invest in both commercial and residential real estate.

Rent-to-own property investment

This is the kind of arrangement whereby a tenant makes rental payments with the hope of owning the property after a given period.

This is a strategy that is adopted by many investors because it allows them to charge higher rents. It also has higher profits.

However, the risk of this investment is having tenants bail out before completing the payments. There is also the risk of being stuck with vacancies if you don’t get tenants immediately.

Boarding houses

If you live in an area where there is a college, you need to consider this option. Boarding houses normally bring in more rent than most rental properties. This is because each room of the houses brings in a given amount of money.

These houses do well even in areas that aren’t near colleges like places where there is a lot of tourism.

The main risk of this investment is damages. If your tenants are college students there is a high probability of spending a lot of money on repairs. However, you can get a caretaker to help you watch the property.

Speculations

In real estate investment, there is a strategy called speculations. This means that you buy property when the prices are lower, then wait until they are higher and sell them. You can maximise on low housing prices to get your property.

As with all speculations though, there are no guarantees. The markets may not do well like expected. This will force you to hold on to your investment much longer. You may even end up selling them at lower costs.

Make wise investments

A lot of different property will come to the market from time to time. However, not all of these will provide good investment opportunities. You need to know when to invest in a property and when not to do it.

You also need to stay up to date at all times. Set in place measures to help you know when new properties are available. This will help you maximise the best opportunities.

There are many properties that you can invest in, however, not all of these present good investment-grade opportunities. You need to find the best investment-grade properties to invest in.