Real estate, one of the best ways in to invest your money in, offers several different options so you can make intelligent decisions. You must have heard about the different methods of real estate investment, mainly stocks and bonds. This one talks about the different approaches you can make to buy a home in any neighborhood you desire. These approaches will make things clearer to you when you are ready to make an investment. Some of the strategies may seem confusing and some easy, it all depends on what you want the end result to be and what kind of funds are available to you.
Creative Financing
An interesting method to make a real estate transaction. You get creative financing to back your investment. You can buy properties using Other People’s Money, or OPM as it is popularly known. If you are an investor, then you don’t have to spend much money on the property. It happens when a seller doesn’t want the property anymore and is ready to receive a monthly payment for the same. Such properties carry notes with them, notes with stipulated time limits. Usually the time limit for this kind of agreement is between 1 and 5 years.
Banks and other Lenders
The name suggests that this is the traditional method of making a real estate investment. Once a full documentation of your credit report and debt information is received, you can expect the lender to sit on it for a while before he gives you the money. But it sure is a safe way to make money for your real estate investment.
The Lease Option Method
You like a particular home in a favorable neighborhood, and you don’t have the funds to buy it presently. You can approach the seller and ask him for a lease option. A lease option works like this: you have to pay rents for the property for a certain time-frame. Once that period is completed, you can buy the property from him, provided you have the funds. You draw an official agreement/deed with the seller and in this, the seller promises that he will not sell the property while you are paying the rent for the same. This agreement is called “option”. The lease option method is also called ‘Rent to Own’. However, this will be a short-term solution and you have to raise money by then.
The subject-to-existing-financing Method
This is a short-term solution for you in real estate investment strategy. It happens when the seller is trying hard to pay off the mortgage. The title of the property is transferred to your name, but the loan stays in the seller’s name.
Buying them Wholesale and then Selling them Off
You can buy properties wholesale, manage them, make changes and repairs, and then sell them off for a good profit. For this strategy, you need to be constantly on the alert and have a good idea about the prices in different neighbourhoods and compare them with rest of the house. It would be a full time job, but extremely rewarding.
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