Sunday, December 19, 2010

Real Estate Investment Strategies

Real estate has been considered since time immemorial as one of the most stable investments one could make. Properties always appreciate in value especially when well maintained. Real estate is also a good investment as it develops discipline in the investor since your assets are now not easily liquefiable.

Furthermore if you invest in a property and let it out, you are assured of a stable monthly income. It is therefore important to apply one of the many effective real estate investment strategies available.

Bargain purchase is one of the best real estate investment strategies. In this strategy you buy property for less than its market value. If you use the right research channels you can get property at a price that is 20% less than its market value. However, getting property being sold at a lower value than its estimated market value can be very difficult.

One good place to being your search for cheap property is in auctions. Banks and other lenders normally sell properties that have been put up for foreclosure in public auctions. As lenders are not particularly interested in making a profit, they will sell the houses to the highest bidder. Their primary concern is recovering the money lent out as fast as possible.

The second of great real estate investment strategies is the increase-value strategy. In this strategy, property is purchased at its market price. However, not just any property is purchased.

The property must have unrealized potential upon purchase. Your challenge is to make the necessary improvements to bring its value up by at least 20% in not more than 6 months. The six month period is given as a guideline to ensure that the investment is worthwhile.

One of the worst real estate investment strategies is buying property with the hope that it will appreciate on its own. This is a strategy that is used by most people. This strategy is dependent on market wide appreciation of property.

However, it is faulty in that there is no means of forecasting which regions will appreciate in value. You may buy property in an area that will become a slum or depreciate in some way or another and end up selling your property at a loss.

By: Martin Njogu
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