How the Average Real Estate Investor Can Pick the Right Strategy in Today’s Market
Even Donald Trump says that now is the best time to buy Real Estate. The record high number of foreclosures are showing a multitude of amazing deals for the eager investor. Many experts are also predicting that housing prices are still going to drop as much as 50%. With all of this contradictory information, what should the small time average real estate investor do?
Housing prices have done a dramatic retracement recently. There are plenty of bargains out there for considering. Even if the prices drop significantly, the potential investor needs to look for ways to minimize their risk. This can only be done by understanding the current real estate market and by knowing which strategies work best in the current market.
Understanding the current market is not easy unless you’re a seasoned professional real estate investor. An in depth market analysis is necessary to understand all of the variables that can affect your future investment.
This market analysis can be performed by the investor themselves, or by a real estate expert. The benefit of having a pre-prepared market analysis is that all of the guesswork is removed. You will simply read the information and then be able to make an informed decision. It can be confusing to do your own analysis of the real estate market unless you have a lot of personal experience.
My recommendation is to seek out both the advice from experts, and to do your own research. By reading books and taking courses, you will learn more about performing your own research over time.
The second step is to understand which real estate investing investing strategies work best in today’s tough market. This can be done after you determine what the current market looks like.
An interesting strategy that works in all markets, and works especially well going into 2008 is by using the “Lease Purchase Agreement.” This strategy is also known as rent-to-own, lease purchase, lease option, lease option to purchase, lease purchase contract and lease option to buy. All of these names refer to the same strategy.
The magic of this strategy is that it helps you make more money monthly than a traditional landlord collecting traditional rent. This strategy also helps you to collect a higher purchase price than current market prices. It’s possible to sell a home on a rent-to-own basis for as much as 10% to 30% higher than the current appraised value of the property.
The Lease Purchase Agreement also allows you to collect more money up front than if you were to rent the property as a landlord typically does. The beauty of this is that if the tenant-buyer ends up not purchasing the home, the real estate investor get’s to keep the entire up front down payment money if the Lease Purchase Agreement is not activated.
The buyer also benefits from using a Lease Purchase Agreement because it allows them to have an ownership interest in the property. They will often agree to handle all maintenance of the property under the agreement because they are intending to lease purchase the property. Of course the LPA gives them the option to purchase the property, they do not have to. If they do not purchase the property under the contract, then the investor can sell the property to someone else at a later date for a higher price (possibly using another rent to own agreement).
The savvy real estate investor protects themselves from risk, and is setup nicely to earn extra profit under the lease purchase option agreement. It does not matter whether the tenant-buyer ends up purchasing the home under the lease option or not, the investor is protected either way under the rent-to-own system.
Mark Chambers is a Real Estate Investing expert. Mark teaches people how to purchase Real Estate creatively to build wealth quickly. For an in depth analysis of the current Real Estate market, including which strategies work best in today’s volatile market, please visit Mark’s website at http://www.LeaseOptionFortune.com.
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