What Property Investment Strategies Make the Most Money?

Investment Property

If you have the right mindset and an adequate amount of capital, you can make a lot of money with the right property investment strategies. While property investment isn’t as risk free as some people view it to be, in the right hands it can be a great way to earn some extra cash without undue risks. It doesn’t matter if you’re looking at beachfront property or midtown condos, The key is to have a long term view in respect to the property investment strategy that you’re using. Property investing isn’t for someone looking to make a quick buck.

You can make money in three different ways from investment properties. First, you can rent the property that you buy out, either to tenants or to weekend vacationers in the case of beach investment property. You can also make gains from improving the property and also from appreciation in the value of the property. However, most non-contractors will only be able to make mild improvements in the property while using it for renting and for appreciation.

So, what is the best way that you can gain from these two ways of property investing? There is one simple tactic that you can use….

Investment Property

Don’t Buy at Market Value
While it seems simple, most people don’t heed this bit of advice. Buying a home at market value is for homeowners who want to use their home and are willing to pay a premium for the luxury of having just the right home for them. However, with investment properties you want to have a share of equity in the home from day one. This allows you to cash in easier on price appreciation and also to more quickly leverage the property that you have to buy another investment property once the loan has been paid off. There are several ways that you can go about finding investment property that is below market value.

Look for Off-Balance Markets
The easiest way to find great deals on property is to look for quality properties in off-balance markets. As Warren Buffett once said, “When there is more fear than greed in a market than it is time to buy.” However, even though prices are comparatively low in a certain market, it still might not mean that it is time to buy.

Try to make sure that the underlying real estate market is still strong but the prices themselves are what is too low. For this you need to look at population growth trends, the growth of the local economy, and also what would attract people to live in a certain town or rent out the property that you are looking at. How fast houses are selling on the market is another great way that you can tell whether or not it is time to invest.

Lock in on Preconstruction Pricing
Another way to find a great deal on homes, and especially condos is by locking in on pre-construction pricing. Pre-construction pricing usually comes in at a discount because the developer needs some upfront money to put up for the bank. However, there are risks involved in this, namely the developer going bust and never finishing to project or completing it rather shoddily. If you’re planning on locking in on preconstruction pricing as part of your property investment strategy, make sure that you go with a develop that has a good track record and solid financials.

Find Foreclosed and Seized Homes
A third way of buying investment property for below market value is by finding foreclosed or repossessed properties. These properties are owned by banks or local government who’s main focus is to recoup their loss to tax evasion or loans. Because of this, they are more likely to sell the property below market value if they can get back their money. This is also conditional on a usually larger than normal down payment by you and a good credit score, so the bank won’t lose money on the property twice. If you’re interested in this, check out foreclosure, which has the nation’s biggest listing of properties that have been foreclosed on. A seven day free trial might be all that you need to find that dream property you’re looking for without having to pay through the nose for it.

Investment Property

Investment Property Loans
Another important part of any strategy for investing in property is where you will get your property investment funds. Ideally, you want to give yourself maximum exposure to the upside of a property, but with minimum exposure to the downside. This means that you want to have as little of your own money in the property as possible. While this isn’t entirely possible, most banks require larger down payments for investment properties because they are more likely to be defaulted on, you can use your property as a rental to pay for the mortgage while you are waiting for the price to increase.

You should also try to get the best terms on your loan as possible. The easiest way of doing this is to find the loan you’re looking for though an online broker like Lending Tree. LendingTree Mortgage Loans allows you to see several different offers from banks as they all try to compete with your business. It’s the easiest way to get a great loan!

Don’t Forget About the Tax Man
Finally, not matter what investment property strategies you’re using, make sure that you don’t forget about the tax man! Capital gains taxes can eat up a large portion of your real estate gains, so make sure that you consult with either an accountant or lawyer before you decide to sell properties or to figure out the tax implications of it. You don’t want all your hard earned money wiped out by Uncle Sam!

There are numerous different property investment strategies, but there is really only one that matters – buy low and sell high. You can do this through several different ways, either by looking for foreclosures, finding preconstruction sales, or just finding property in weak markets. Just take a long-term mindset and watch your money start to grow!