The real estate market has undergone major changes in the past few years. What once was a thriving, profit-generating extravaganza has become a downtrodden, money-losing fiasco. However, real estate investors are changing the rules of the game by thinking outside the box and creating new opportunities.
Many types of real estate are available. Residential properties offer a variety of opportunities to generate positive cash flow. Investors can offer properties as rental homes or vacation rentals, or offer creative financing strategies which allow buyers with bad credit the opportunity to purchase a home while engaging in credit repair.
Commercial real estate encompasses a variety of properties including apartment or condominium buildings, warehouses, office buildings, or retail shops. Investors who buy commercial properties often partner with other investors or investment groups to cover the costs and management duties required to maintain commercial investments.
Real estate investors often turn to foreclosure and bank owned properties when seeking out new investment properties. Bank repossessions can include all types of properties ranging from mobile and manufactured homes to high-rise apartment buildings and industrial parks to vacant land.
Locating foreclosure property for sale is relatively simple. Realtors have access to the multiple listings service (MLS) database and can help investors locate the type of investment property they desire.
Foreclosure real estate is first listed for sale through public auction. If no bids are placed, the property is returned to the servicing lender. Banks sell foreclosed properties through their loss mitigation department or assigned real estate agent.
Bank owned real estate is usually priced higher than properties sold through auction. However, once banks retain ownership they remove attached tax liens or creditor judgments which allow buyers to purchase the property with a clean title and take quick possession.
One source investors are turning to for discounted residential foreclosure property is Fannie Mae’s Home Path Mortgage program. In addition to offering properties at deeply discounted prices, Fannie Mae’s home mortgage program offers special financing options and low down payment requirements.
Many Fannie Mae homes qualify for HUDs Neighborhood Stabilization Program grant funds. NSP grants are offered across the nation to individual buyers and investors who purchase real estate in neighborhoods with high foreclosure rates. Investors can receive a maximum of five NSP grants and funds must be used to rehab the property.
Another option for buying bank owned foreclosures is to locate wholesale investors. Wholesalers purchase properties in bulk to obtain wholesale prices. Investors often purchase bank portfolios consisting of dozens of foreclosure homes. It is not uncommon for investors to buy distressed properties at 30- to 40-percent below market value. Some investors rehab the properties, while others sell in ‘as-is’ condition and pass along the bulk of savings to buyers.
Commercial real estate investments can yield a good return on investment as long as investors take time to evaluate market conditions. Investors who purchase commercial properties may be entitled to tax incentives for developing properties that can bring employment opportunities to the area.
Investing in commercial properties requires knowledge of federal, state, and county laws. Properties must comply with the Americans with Disabilities Act and be properly zoned for commercial enterprises.
Although the real estate market is in a slump, there are still plenty of investment opportunities that can yield profits. In order to be successful in today’s market, investors need to constantly stay abreast of market conditions and be flexible enough to change strategies when needed.
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