What are the three best real estate investing techniques for 2012? After carefully analyzing market reports, studying recent trends, and looking at where we are making the most money in the business right now, three investment strategies emerged as the most accessible and the most profitable for the new year.
By focusing your efforts on these three real estate investing techniques, you can make 2012 your best year ever! That’s right, even in this down market, there is tremendous opportunity for you to make big money investing in real estate.
Technique #1 – Assign Lease Purchase Options to Rent-to-Own Tenant Buyers
That’s a mouthful, isn’t it? Assigning lease purchase options to rent-to-own tenant buyers is a little-known real estate investing technique that is very profitable and the absolute fastest way to put quick cash in your pocket. Literally, within a few weeks, you could have $3,000, $4,000, even $6,000 extra money in your bank account.
Here’s how it works:
There is a large number of prospective home buyers who can’t qualify for a mortgage. Lenders have tightened up, creating a huge backlog of people who want to stop renting and own their own home, but simply can’t because they can’t qualify for a loan. Enter the “Rent to Own.”
A rent-to-own home (or lease purchase option) gives the person the option to purchase the property while they are renting, and in some cases, allows a portion of each payment to go towards the purchase price. For those unable to qualify for a mortgage, it is the ideal scenario. Therefore, the rent-to-own is in very high demand right now.
At the exact same time, there are hundreds of thousands of properties on the market right now that are not selling. In many cases, the reason why the home is not selling is that the homeowner is unwilling to drop the price low enough to compete with the short sales and foreclosures in their neighborhood. Month after month, these listings sit with no showings and no offers.
Overtime, these property sellers get tired of making payments on a home that won’t sell. If offered, they actually would be quite open to a lease purchase option, whereby the person agrees to lease the property with the option to buy it in the future.
The problem is, no one is offering to do a lease purchase option on their home. Buyers’ agents rarely bring rent-to-own tenant buyers to listings. Homeowners do not know how to find and handle the details of a rent-to-own transaction.
- If rent to owns are in demand, and
- Homeowners across this country would be open to a lease purchase option,
- How do you turn these two factors into money?
In simple terms, you bring the two parties together. For most rent-to-own deals, the option to buy the property requires an upfront payment from the tenant buyer of $4,000 to as much as $10,000 or more, depending on the property. By getting the property seller to agree to a lease purchase option in writing, you then assign your interests in that agreement to the tenant buyer for a fee; an amount that could be as much as their upfront payment or a portion thereof.
Since tenant buyers and property sellers are both motivated to move quickly, these transactions can be completed–start to finish, in a matter of weeks. If you are short on cash right now and need a quick boost to your bank account, use the real estate investing strategy of assigning a lease purchase options to rent-to-own tenant buyers; it’ll probably be the fastest money you’ve ever made in real estate.
Technique #2 – Foreclosures
Industry insiders predict another wave of foreclosures will hit the market in 2012. Improper handling of foreclosures over the past several years led to Federal investigators to review banks’ foreclosure practices and in many cases, they found problems. This created tremendous delays and stopped many foreclosures from going through in 2010 and 2011.
Banks and the Feds are settling on a solution right now in Washington, and it should be completed very shortly. When this happens, expect a new flood of foreclosures on top of the massive amount of foreclosures already.
Foreclosures can be a mine field. Just because a property is a foreclosure does not automatically make it a deal. In fact, if you pay too much in this market, you can really lose your shirt! Savvy foreclosure investors know that great foreclosure deals are the needles in the haystack. They exist and may be all around you, but they are a small percentage of the overall foreclosure population.
What’s the secret to finding the select few extremely profitable foreclosure deals? Top producing REO (real estate owned) agents. They are the fountain of youth for foreclosures. In any market, there are a select few REO/Foreclosure agents who rise above the rest. They close 300, 600, 900, or more transactions per year.
From time to time, these REO agents have foreclosures listings that require a fast cash investor buyer to purchase quickly. If you are on their speed dial for such situations, you’re in for a big money-making deal.
Technique #3 – Short Sales
This report would not be complete without mentioning short sales. More than 1 in 4 mortgage loans in this country are underwater. For borrowers in this situation, many will require a short sale. The sheer amount of prospective short sales is gigantic. Plus, there is terrific money to be made in short sales if you have taken the time to properly educate yourself on how to approach them.
The beauty of the short sale is that the property is still owned and controlled by the homeowner. This creates tremendous flexibility for the savvy real estate investor. Some investors negotiate the best deal they can with the short sale lender, buy the property and resell it for a profit.
Others get their real estate license, so that they can list the short sales they don’t buy and still collect 3% commission as the listing agent. On a $500,000 home, a 3% commission is a very respectable $15,000 payday.
Short sales have undergone dramatic changes over the past several years. Those investors who are on top of their game have adjusted accordingly and are making big money with short sales, both as investors buying and reselling them as well as collecting fast commissions as the listing agent.
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