The following real estate investment ideas revolve around the general theme of gaining some special advantage. This is more necessary that normal at the moment (2009) because it is unclear whether home values will continue to fall. Having the right approach limits the risk inherent in falling prices and slow sales times.
1. Look For Special Infrastructure Situations
Infrastructure changes can radically affect prices of homes. Transportation issues in particular matter when evaluating the future value of a property. I recently read a story about an investor who bought houses in an area soon to be serviced by a new commuter rail line into a large city. The value of real estate there went up 50% in about a year.
Look for areas where new roads or train or bus lines will soon be opening? This could be an opportunity. Also, as a precaution, before you make a real estate investment, check to see if there are there any train or bus routes that will be closing soon. This could drive property values down.
2. Imagine Worst-Case Scenarios
Think of all possible problems when looking at a real estate investment. The reason for this isn’t just to help you decide if it is worth the risk, but also so you can make contingency plans that take everything into account. For example, what if the market softens by the time you finish fixing up a property? If you can’t sell at a decent price, can you rent the house for a year or two until conditions are better for selling?
Have some idea of how you can deal with any potential problem. Fortunately real estate is one of the more flexible investments. A given house might be sold, rented, leased with an option to buy, sold with easy seller financing, rented by the room, made into a duplex, or lived in until prices firm up. Have a few options available to you just in case.
3. Try Fast Fixer-Uppers
There is a lot to be said for acting fast when markets are uncertain. Real estate is always expensive to hold onto in any case, and speed reduces those costs if you are buying and selling a fixer upper. More than that though, selling as quickly as possible becomes more important if property values are still falling in the area. With that in mind, here are a few real estate investment ideas for fast flipping of houses.
– Have a plan in place as soon as you make the offer.
– Make the offer contingent on a quick closing if possible.
– Arrange for contractors to start the day after closing.
– Line up a real estate agent and have a marketing plan in place before the home is even ready.
– List the property for sale and start advertising a few days before the project is complete.
– Price the home slightly below the market for a faster sale.
Real estate investment has some risk involved at all times. But these are especially tough times, so look for ideas that reduce the risk and give you some special advantages.