יזם חשׂבוע – פוסט מספר 4Real Estate Investment Types:One of the beauties of real …
יזם חשׂבוע – פוסט מספר 4
Real Estate Investment Types:
One of the beauties of real estate investing is the number of investment strategies available for a real estate investor to choose from. These strategies range from long-term to short-term investment strategies, and each of these approaches falls into a number of sub-strategies. Now, you might be wondering since there are so many strategies, which one is the best? Well, the long answer would be: depends on a number of factors such as the type of investment property, the location, financing, etc.
- Wholesale – So wholesaling real estate is probably the most common type of RE investing as it requires little to no funds. How this works is that one finds a motivated seller that is willing to sell his home under market value at this point you would sign a contract with the seller for x$ and you would then turn around to find someone to buy the contract for you for x$ + Y$ the Y$ is what we call assignment fee, the assignment fee is the profit the wholeseller will have once the transaction is complete.
- Fix and Flip – This type of investment can also be done with little to no money down most investors use cash, hard money or private money for these deals. for this type of investment you would find a distressed or out dated property that after fixing it up and turning the property into a nice and livable condition the amount you spent in total would still be under market value most investors will try to be all in at 65%-70% of the ARV in order to profit from their investment.
- Buy and Hold – The buy and hold strategy is the most traditional and most common real estate investment strategy. As the name suggests, buy and hold real estate is when a real estate investor buys a rental property for the purpose of investing in it for the long term. In other words, this investment strategy involves buying an investment property and leasing/renting it out for a long time period to make money both in the short term and the long term. Short-term income comes in the form of monthly rent collected. Long term the real estate investor simply holds the investment property until it appreciates and then sells it for a higher price than the initial purchase price.
- Buy and Flip – Buy and flip is kind of a hybrid of fix and flip and Wholesale one would purchase a property close on it and sell it to another investor or end user without having to do any repairs, this method works best when buying and REO (bank owned property) or a short sale as in both scenarios the investor cannot wholesale the property.
- Tax Lien – tax lien investing as an indirect real estate investing strategy, t works like this: governments sell tax lien certificates to investors in order to recover money delinquent property taxes due to them. Homeowners then have an opportunity to pay the delinquent amount due plus interest (18%) to prevent the investor from foreclosing on the tax lien he or she holds .Don’t invest in tax liens with the expectation that you will get a property out of it at a fire-sale price, About 98 percent of homeowners redeem the property before the foreclosure process starts and once a tax foreclosure starts, all but one-half percent of those homeowners redeem
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Great post!