Are you planning on getting into the investment game? Are you considering the real-estate sector to increase your income? But, don’t know where to start?
You can start by researching successful investors who have made a payday in real estate investing or book an appointment with the experts at Freedom Property Investors.
To navigate property investment, you must start with a plan and a financial budget for negotiation strategies to make your real estate investment a lucrative activity. The best kept secret in real estate investing is how you can acquire properties at a low cost and focus on making a profit by selling the property or using it for rental income. To achieve this, there are some secrets of highly successful investors that you can use to make your efforts more profitable.
10 Best Kept Secret in Real Estate Investing
Without further ado, let us review the best kept secrets of highly successful investors that can help you to succeed in the property market today:
The practice of note buying:
One of the best kept secret in property investing is buying a note. A note is simply a mortgage secured by real estate. A promissory note can represent a first mortgage, second mortgage, deed of land, or bill of sale.
As a promissory note broker, in addition to a bank that buys and sells promissory notes, you can do the same. You can also easily broker transactions between lenders and buyers. This secret helps you invest in real estate when you do not yet have the huge capital to buy properties.
Use of real estate investment groups (REIG):
An REIG is like a small mutual fund that invests in rental properties. In a typical real estate investment group, a company buys or builds several apartments or condominiums and joins the group by allowing investors to purchase them through the company.
An investor may own one or more stand-alone homes. Still, the company that operates the investment group collectively manages all units, provides maintenance, posts job listings, and moves in. interview the person. The company receives a portion of the monthly rent in exchange for these management duties. This reduces the risks associated with real estate investments, diversifies the portfolio, and can help investors to increase their income.
House flipping is for those with extensive real estate appraisal, marketing, and renovation experience. Flipping a house requires capital and the ability to make and supervise repairs as needed. House flippers are just like intraday traders in the stock market.
In house flipping, experienced real estate investors often try to sell undervalued properties they bought for a profit within six months. Ardent real estate flippers continually do not invest in property improvements. Therefore, the investment must already have the intrinsic value required to make a profit without modification. The key is to find a property with a “twist”— with a unique feature. This increases the intrinsic value of the property.
Aim for the urban real estate market:
An urban real estate investment meets all the criteria of a solid real estate investment. Cities usually have an excellent rental market. Many people need housing and are willing to pay premium rates. The market is stable in urban areas. There is no such thing as a boom-bust mentality. Demand is unlikely to fall.
Many successful investors invest in metropolitan cities such as Melbourne and Sydney, as these cities are a cradle for economic growth, directly impacting the domiciles’ property purchasing and renting capacity.
Buy the right property, not the cheaper one:
Do not look for “cheap” properties but always look for a good property at a fair price. Successful investors choose properties in this order. It is a top-down approach. The right property is a property that is consistently in high demand by owners, tenants (who add value to the property), and renters (who help pay off the mortgage).
Buy a property that is priced below its intrinsic value:
The intrinsic value of property implies the actual value the property can provide. This can be determined by several factors like location, climate, neighbourhood, land quality, etc. The higher intrinsic value signifies that there is more desirability for that property. Once you have determined the intrinsic value of a property, find a deal priced lower than this value.
Prefer properties with a high land-to-asset ratio:
The reasoning is simple. The land cost will always increase as it is a natural resource, but the asset’s value will be linked to the utility and location. This does not necessarily mean large real estate, but the land component must be a significant portion of the property.
Areas with a history of strong capital growth:
The strategy is to buy property in areas with a long history of strong capital growth and will continue to outperform, given the region’s demographics. This area is where more owners would prefer to live based on their lifestyle choices, and locals are willing to pay higher prices due to their higher disposable income.’
Find a property with a twist:
Property-specific uniqueness bestows certain values on the piece of real estate that can help the investor outperform the market. It can be a regional history, an important landmark, or the weather and climate particular to that area.
Potential for manufactured capital growth:
Rather than waiting for the market to deliver capital growth, one should buy properties that can achieve manufactured capital growth through renovation, refurbishment, or redevelopment.
The Bottom Line
Whether a real estate investor uses a property to generate rental income or waits for the perfect sales opportunity, building a solid investment program by paying a relatively small portion of the total property value upfront can. Like any other investment, real estate has benefits and potential whether the overall market is going up or down. It has become aptly evident that the best kept secret in real estate investing is no more than a logical set of decisions attempting to minimize improbabilities and risks in a real estate market.
For more queries and sound property investment advice, contact us at Freedom Property Investors.