Real Estate Investing: Things To Consider

Investing in real estate is an excellent way to make a living or to simply make some extra cash on the side for family vacations, holidays or excess bills. While investing in real estate has become a lucrative business that affords many real estate agents, investors, scouts and dealers an excellent annual salary, many who are interested in investing in real estate simply do not know where to get started. Depending on your level of interest in real estate investment, there are several options for getting involved in investing in real estate. 

Of course, the most obvious course of action would be to acquire a real estate license to help others buy and sell homes. Many real estate agents who initially received their real estate license to make a living, have also become involved in the real estate investment process, because of easy access to MLS listings, new deals listing on the markets, foreclosures and even great mortgage options. Remember that if you are working as a real estate agent, though, you will be approached by buyers and sellers looking for someone to fairly represent them in the real estate process and for someone who is knowledgeable about real estate. All real estate agents will need to attend a series of courses in order to receive a real estate license, but you can continue to increase your earnings as an agent simply by becoming an investor and becoming more knowledgeable about the real estate process. 

Even if you don’t have plans to become full time invested in real estate as an agent, there are still several other ways to begin investing in real estate, such as purchasing rental properties, wholesaling or flipping houses, or purchasing commercial properties that can be leased out to store owners.

If you are not sure how much time and money you have available to invest into the real estate business, you may want to consider first taking baby steps through the process of wholesaling houses. Simply put, wholesaling houses means being the middle man between a real estate ownership investor and the seller, finding the investor a good deal and then making a profit from that deal. If you are currently a real estate agent, this is an easy step to take, as you have access to MLS listings and new market deals, but even if you are not a real estate agent, you can still find great deals for an investor without actually having to put your own money on the line. Most wholesale investors will simply be a scout who finds good deals on homes that mainly need cosmetic repairs to bring them up in appraisal value. From here a wholesale investor will actually put their name down on the contract form, but will note that they may be assigning the property to someone else during the 30-45 days involved in the closing process. Usually when putting a bid down for a contract, the bidder is expected to also put down earnest money or a down payment to let the seller know that they are serious about the bid. Many real estate agents will have a set fee for the earnest money, while others will let you select how much to put down. Put down as much money as possible, that way you are not stuck with the burden of transferring funds once you have found a suitable ownership investor. From here you will find someone who is interested in purchasing the property to fix-up and resell or “flip” in a short period of time, and will then sell the contract on the house to that person for a higher price than your original contract. Whatever the difference between your initial bid and the deal with the ownership investor will go in your pocket for simply setting up the deal.  

Of course, if you have the time, the labor and the money you can always be on the end of the house flipper rather than the wholesaling agent in real estate investment. While wholesaling houses usually pays between $2,000-$10,000 per house deal, flipping houses on your own can pay upwards of $20,000-$50,000 per home, depending on the real estate location, the value of the home after refurbishing and the current market. Remember that investing in real estate by flipping houses requires you to actually take ownership of a home, usually for only 1-3 months as that home is being cosmetically repaired. If you plan to flip homes, you don’t have to go through a wholesaling investor to purchase a home, but wholesale investors can save you valuable time and energy if you are working somewhere else full-time. If using a wholesale investor, remember that this will cut into your total profit in the end because you will have to pay that investor a certain percentage of the contract, but it may be worth it to not have to find your own homes to purchase.  

Another great way to easily get involved in the real estate business is through rental properties. For whatever reason, either owning pets, being in the military, not having good credit, or not having enough money to purchase a home on their own, there are a multitude of people throughout the country who are only looking to rent a home to live in, rather than investing the time and money to purchase a home. Especially for young families, new young business professionals or those in the military, renting a home is much easier than dealing with the hassle of finding a home to purchase and paying the insurance, mortgage and home warranties.  

Getting involved in the home rental business is a great way to begin investing in real estate and can be done by simply purchasing a moderately priced home in a fairly nice neighborhood, giving the home a few cosmetic repairs and putting out advertisements for home renters. When looking for a rental property, it is best to consider what others will need to comfortably live in a home. Experienced rental property owners will tell you that desirable features include a three bedroom, two bathroom home with a spacious living room and kitchen area, as well as a spacious backyard, preferably with a fence. 

Of course when taking applications for a rental property, you will want to do the necessary background checks to make sure that the potential renter is capable of paying the rent on time at the first of the month. You will also want to draw up a lease agreement discussing costs for a deposit, costs for damage, and other requirements you have for the property, including limitations on pets, who takes care of lawn care and other household maintenance issues.  

One of the major concerns to keep in mind when looking to begin investing in real estate rental properties, is the price of rental homes in the area you are looking to buy. How much will renters be willing to pay on a monthly basis to live in a rented house? If the average price of rental homes is $1,000 a month in the area you are looking for rental properties, you will only want to focus on homes that will allow your mortgage, including home owner’s insurance and taxes to be under $1,000 so you can make some profit off the home. Remember that while you may not make a huge profit off of the home in the first year or two, eventually the price of rental homes in the area will increase, and your real estate investment will begin to show profits in the long run.  

I hope you have enjoyed this article. For more articles on real estate investing, to sign up for our free newsletter and listen to free weekly training teleconferences please visit my website at www.LarryGoins.com where you will also find free forms, documents, EBooks, Downloads and more. Also visit www.FinancialHelpServices.com  for investor financing. You will also find wholesale properties for investors and can sign up for notification of new available properties at www.InvestorsRehab.com.