Flipping Houses, Rehabbing, and Landlording: Who Makes the Most Money Investing in Real Estate?

There are many ways to make money in real estate. Two popular and proven ways are flipping houses and landlording. Often, both of these methods involve fixing or rehabbing the property for higher profits.

Flipping Houses to Make Money

House flippers pick up property at a low price and quick turn it for a profit. Different strategies for flipping houses include:

1. Turning Contracts. Many investors find a bargain house owned by a desperate seller and get a contract to purchase. They then sell the contract to another investor or to a owner-occupant home owner. This method requires great negotiating skills and knowledge of the current market. You must know how to move the contract or you make no money and unfairly tie up the home owner. Successful flippers repeat the system over and over: contract, sell, buy--and make modest gains on each transaction. This method helps beginning investors make quick money to get a bankroll to buy more houses.

Not only do the landlords receive cash flow each month, they get tenants to pay the mortgage for them and over time the value of the property appreciates.

2. Buy Ugly Houses, Fix and Flip. Another flipping method is to purchase bargain property either with financing or cash. In this strategy, the flipper becomes the fixer and makes the money that the investor would make in the "turning contracts" system.

3. Buy Pretty Houses and Flip. Not all bargain houses are fixers. You can find sellers whose homes are in perfect condition but their personal life makes keeping the house impossible. The key to getting a pretty house from a needy seller is to be ready to cash the seller out with pre-arranged financing or cash.

Landlording to Make a Fortune

Wealthy real estate investors buy properties as long term investments. Rent brings in a consistent, positive cash flow if the properties are purchased at the right price and rented for maximum profits. Investors frequently fix up the properties for higher rents.

Both flipping and landlording make money when you buy low, rent smart, and sell for top dollar. However, over time, landlords make the fortunes investing in real estate.

Free ebook: The Truth about Making Money Flipping Houses at http://www.doghousetodollhousefordollars.com

Author Jeanette Fisher teaches real estate investing, home staging, and interior design methods to make more money renting and selling houses at Lake Elsinore Real Estate.

Copyright © 2006 Jeanette J. Fisher

Tips for Investing in Michigan Real Estate

One of the most common ways of making money is by investing in property. This business is similar to investing in stocks and you will definitely need all the vital fact before you purchase a house or piece of land. But how can a person get information about real estate and property values? Well, you can enroll in a real-estate class, or acquire information from the Internet. Soon you will know all about, New Mexico, North Carolina, Iowa, Tennessee, and Michigan real estate.

Have you heard anything about Michigan real estate? This is one of the Mid-Western states that I have been monitoring lately. I am trying to find an ideal place where I can raise my children and keep them safe from all dangers. You might say that it’s a futile exercise, but some areas are definitely better than others. I think anybody would have to agree with me on that. I am not entirely sure if Michigan real estate is exactly what I am looking for. It’s difficult to say at this point. I can’t jump to any conclusions before I’ve evaluated all the competitors.

You should keep amenities in mind when searching through Maryland, Vermont, Pennsylvania, and Michigan real estate. Make sure that the areas you’re scouting have the necessary arts, shopping, and culture amenities. If you have children, you should confirm if Michigan real estate offers good school districts. Every parent should provide their children with a good education.

The crime rate of an area is also crucial. This can be broken down into personal and property. It’s essential to take a look into the statistics if you are considering Michigan real estate. You have to know the number of crimes that are committed every year on individuals and the number of crimes committed on property. Criminal offences like property damage and theft are significant factors. You should carefully go over all the elements before buying Michigan real estate, or any other real estate investments for that matter.

Morgan Hamilton offers expert advice and great tips regarding all aspects concerning real estate. Get the information you are seeking by visiting Michigan Real Estate

Investing Tips - How to Make Time Work for You

Almost everyone has heard about compounding interest in one conversation or another over the years. Some of you may even have a pretty good understanding of compounding interest, but I doubt it many of you truly grasp the enormous power that compounding interest has to offer over time. To demonstrate, I am going to give you an example of two investors: Stan and Slater.

Stan, "The man with a plan," decides to start investing right out of high school. While Slater, "I'll wait til later," decides he need to get his life organized before he can worry about investing or anything like that. In the meantime, Stan has started investing $2,000 a year into Rock Solid Mutual Fund earning a consistent 9% per year. He continues to do this each year for the next 10 years for a total of $20,000 invested. At age 28, Stan has decided to get married and have a family. As a result, he no longer has any extra money to invest, so his total of $20,000 invested continues to grow at the steady 9% per year. Even though he always planned to invest more later, Stan never invested another dollar before he retired at age 65.

Now while Stan has been investing, Slater has been traveling the world. He has worked enough to pay the bills and afford several extended vacations each year. He has also been taking classes at the local university and he should have enough credits to earn a degree in business soon. At age 30, Slater earns his degree and starts looking for a career. Over the next 5 years, Slater gains some great experience and is able to land a high paying job at age 35. He is making a lot of money, but Slater still has a lot of monthly expenses. Even so, Slater knows it is time to start investing some money for the future. He decides to invest $2,000 a year into Rock Solid Mutual Fund earning a steady 9% a year. Slater continues to invest $2,000 a year every year until he retires at age 65. Over the next 30 years, Slater invests a total of $60,000, three times the amount of Stan.

Who do you think has more money when he retires at age 65? I think the answer will surprise you, but the amount of the difference will shock you.

To find out the answer, visit http://www.1stock1.com, a free investment website created by Alan Reisch. Alan has a degree in finance and has worked as a licensed investment represenative for two well known full service brokerage firms.

Investing Locally vs. Nationally

You're driving down the street in your hometown when suddenly you see a goldmine sitting in front of you; it is a vacant house, with overgrown weeds and in need of some TLC. It's screaming "buy me cheap," and the wheels start spinning in your head about the 10 to 50 thousand dollars you can make by rapidly acquiring this home, renovating, and then selling as a pretty house. You scramble to the courthouse, look up property owner, and SCORE!!! it's an out of town owner! Clearly they are desparate to sell. You track down the seller's phone number and with much anticipation, you make that all important call….. dollar signs dancing in your head. But wait, you are getting the dreaded message from the phone company, "We're sorry, but the number you have reached has been disconnected..." Bummer. Well, all we have to do is send this person a letter and it is pay day baby! So, out goes the letter knowing the phone will ring as soon as it is received.

After day 5 of waiting, you decide they must just be out of town and any day, you will get that call. After week 2, you are starting to wonder what is going on but still are hopeful. Finally, after week 4, you are starting to believe this is a lost cause. Oh well, another golden opportunity that just didn't quite materialize; there has got to be an easier way.

The above scenario, while hypothetical, is a typical scenario faced by many investors that work on a local basis. Regardless if you are interested in wholesaling, flipping, renovating, lease optioning, or the variety of other options available to you, there are two things that you must accomplish to be a successful local investor: steady supply of quality opportunities and a steady supply of buyers for your properties. As an investor that has participated in the purchase of millions of dollars of properties, locally as well as on a nationally, let me be the first to tell you that BOTH local and national investing work great, IF DONE PROPERLY; however, the impact that each has on your time involvement is wildly different.

In this article, I will try to explain the pro's and con's of investing locally vs nationally. Even though I lead a group of national investors numbering of 20,000, I still invest in my backyard and find it profitable. In my opinion, an investor should not decide BETWEEN investing locally/nationally but rather understand the merits of both and use which ever suits them best at a particular time.

Local Investing: The mantra in real estate investing has always been "invest in what you know – your own backyard". For the knowledgeable investor, this is good advice because then you KNOW when a good deal is actually in front of you. However, when we discuss the national investing approach, you will see that it is not the only way to know the market.

For example, suppose you get offered to purchase a home at a fire sale price of $130/Sq. Ft. According to the broker, this is a slam dunk. If you happen to KNOW that properties are going for $170/Sq. Ft in the area and the fix up costs are reasonable, then in a matter of minutes, you can make a decision to purchase the property. That local knowledge is critical to understanding when you have a good, low risk opportunity.

In addition to just local knowledge, there are a number of other issues that we must consider. Specifically, some of the pro's & con's of local investing that we see are:

Pros:

1. Knowledge of market – If the investor does their homework.

2. Easy access to property – Simply drive to the property to inspect.

3. Can control any fixups, rentals, etc. – Much easier to deal with locally.

4. Can structure deals with little money or credit – Yes, the no/low money down deals do work but just take a lot of work to create.

Cons

1. Heavy competition – Almost all other investors are looking locally so you get the needle in a haystack problem;

2. Time – Because you have to find the deals, it is hard to invest with limited time. Successful local investors set up advertising systems to bring properties to them.

3. No Clout – Let's face it, as an individual investor, it is difficult to get great deals, discounts, etc. unless you have a LONG track record of performing in that market.

4. No Outside Analysis – Other than possibly a local agent helping you, there is little market/growth analysis that is available to you unless you perform it yourself.

Again, this can be quite time consuming. Most local investors take one of two paths after gaining some experience: either they abandon it because it takes too much time, or they find it lucrative enough to turn it into a full time business. For the individual that has money and credit to invest but not much time, then most find the local approach to be frustrating.

National Investing: The best way to understand national investing is to look at Walmart's business model. What they do is find suppliers that can produce quality product at the most competitive price. Because they have such a large consumer base, it is lucrative for the supplier to provide quality product at much reduced margins relative to low volume stores. Also, by not being restricted geographically, they can find those suppliers where the economics makes sense for everybody. In the national real estate arena, it really works the same way. Consider our group that has over 20,000+ investors registered to our database. If you are a real estate developer interested in rapidly selling a portion of your project, then you would be very interested in talking with us because of our volume of buyers. Of course, you know that you are not going to get top dollar for your sales because our investors are not going to buy unless it is a good deal; this is how it becomes a win-win for both the developer (supplier) and the investor (consumer). One other factor comes into play: In many locations, including my local area, many types of real estate investments do not make sense because fundamentals like price, rents, and consumer demand are out of whack. For a national investor, it is absolutely irrelevant because there are always markets doing well. When a specific market, like maybe Florida or California gets out of line, it is simple to just look for investments elsewhere.

Of course, we must analyzy both sides of the national investing equation, as well.

Pros:

1. Buying Power – By being an individual investor within a large group, then you have the buying power of Walmart behind you even though you may only plan on buying 1 property.

2. Time – The national groups do all the work for you at no cost. They are paid fees by the developers and because of volume, it allows them to perform considerable efforts to find quality properties. You simply evaluate all the information that they have gathered.

3. Considerable Analysis – Quality national groups will go to great lengths to understand and convey the local market information to you. They understand that you may not visit the area so they want you to be as informed as possible.

4. Little Competition – Even though there is a HUGE number of investors in these groups, most everybody finds that there is plenty of opportunity to go around. Reason being is that most people want to only buy 1 property and quite frankly, most people do not act quickly enough.

5. Diversification – You can buy properties in different areas of the country so if there is a down turn in one area, it may not impact your other properties.

Cons

1. Personal Knowledge Of Market – You will not originally understand the market; however, the analysis delivered to your email will bring you up to speed quickly.

2. Access To Property – Because time scales are typically short, if you want to visit a property, you need flexibility to juggle schedules (airline tickets are cheap).

3. Rental Issues – You typically don't want to manage a property from long distance, because of this, national groups will identify appropriate property managers in the area.

4. Typically Requires Good Credit – The national groups can obtain good financing options for you, but most are going to want Beacon scores of 650 or higher.

5. Trust – Requires a lot of confidence in the national group. Do your due diligence on the group.

In my experience there is no right or wrong answer to the question: is local investing better than national or vice versa? In fact, I still invest both ways to this day. Hopefully the discussion above has given you some insight into what might become effective for you as you continue to build your real estate portfolio.

Copyright (c) 2006 GetPreConstructionDeals.com

Dr. Chris Anderson is the founder of http://www.GetPreconstructionDeals.com and is referenced in many venues including the New York Times and USA Today. Get his weekly, thought provoking articles by signing up today!

The Latest Investment Stocks Online Articles

Mutual Funds

A mutual fund is perhaps one of the most popular means of long term investing and is the vehicle of choice in IRAs and 401k accounts. A mutual fund is basically a way of investing in a pool of different companies in order to minimize risk.

More articles coming soon!

Investing Stock Online Resources

Yahoo Finance

Venture Capitol

Family Financial Planning Courses

Internet TV