Dean Graziosi

In many investments, the best way to maximize profits is to tie up capital in high-value accounts, stocks, or other such investment. Many people may be tempted to take this approach in real estate investment. However, just because a house is worth $100,000 more than another, doesn’t mean you’ll make any more profit. What is certain is that these high-dollar properties will be much more headache and have much higher fees associated with them than lower-dollar properties.

High-dollar properties are more likely to be on the market for a long time, especially in the soft economy prevalent in the United States for the past several years. While many people may dream about owning that million-dollar house on the beach, only a minute fraction of the population can come close to being able to afford such a luxury. For every month you pay for a property’s upkeep and pay interest on your investment loan, your overall profit on that property is decreased and the effort that has gone into it severely increased.

Minimizing expenditures is always the first step to a successful investment. The higher the price of the original property, the more money you’ll have to spend on interest payments for an investment loan. Even on interest-only payments for the couple of months it may take to fix up the property and hopefully sell it, this can put quite a dent in the pocketbook.

This is not to say that a high-value property is never a good investment. For the most part, only experienced investors who know their market well should consider the risk of high-dollar properties. Novice investors are often better off finding average-sized family homes in decent neighborhoods for a safer investment. These homes are generally in higher demand and are within reach of the average homebuyer.

High resale values do not always translate into higher profits. These properties are generally larger and require more upkeep over longer periods of time for the average time on the market. Smaller properties may put a smaller chunk of cash in your pocket, but when weighed against expenditures and the amount of time before you can go on to the next investment, they are generally the safer and more profitable way to go.

Bookmark With

Buying real estate for investment in many ways mirrors buying real estate for a family home, and at the same time, it is an entirely different animal.  What makes an investment house different from a home?  On the outside, not a thing.  An investment property will look much like a home you view for a living space.  You want it to be presentable, in decent shape (unless you are buying at a severely depreciated rate with the thought of rehabilitation and selling in a ‘flip’ manner).  You also want your purchase to be as affordable as possible.
The difference actually is more of an attitude than a physical attribute.  The difference is in how you, as an investor, view the property for potential resale.  You will have to be sure the cost is in line with what you can afford to invest, and that there is reasonable assumption of sale value over that.  When people purchase a house to live in, they are concerned with its livable qualities the same as you would be - because resale value is better if it is a desirable home-, but they aren’t as typically concerned at that point in time with the value being low enough to resell it for a profit.
That is the reason it makes sense to use specific real estate strategies to obtain homes at the lowest possible price.  Using foreclosures, short sales and loan modifications the way the pros like Dean Graziosi do is the way to make sure you end up with a valuable property that will be a top performing asset for you.
You can use these techniques for any type of real estate investment, even those you aren’t looking to turn over, such as rentals.  The less you pay, the more you pocket and that’s the bottom line.  Unlike other investment markets that are abstract, when you own real estate you own something ‘real’ that you can put your hands on.  Real estate investment is and always will be one of the most solid investment purchases you can own.

Bookmark With

Investing in real estate can be a very lucrative business, as Dean Graziosi has shown us time and time again.  However, it can also turn into a deep, dark money pit, sucking your bank account dry.  What’s the difference?

One of the largest reasons that real estate turns from an investment into a sink hole is that the investor is unaware of issues that can arise before buying a piece of property.  Many of these issues revolve around the overall upkeep for the investment property.  While you don’t have to be a contractor to invest well, it does help to know some of the warning signs.

·    Land sloping toward the building – This may not seem like a big thing, unless you consider water drainage.  If the land around the property slopes towards the house, chances are good that the ground around the building will get saturated in areas of high rain or snowfall.  Ground saturation can cause mild to severe settling of the building.

·    Cracks in the walls – You may look at small cracks and think, “That’s not so bad”, but those cracks can mean bigger problems.  Cracks in basement walls and foundations, generally caused by settling, can also mean sticking doors and windows, as well as a history of leaks.

·    Discoloration or recently painted walls – Areas of discoloration along the tops or bottoms of walls can mean mild to severe plumbing problems.  Many property owners “clean up” the discoloration by painting over them.  If you suspect this might have been done, check the closets; most people don’t think of painting in there, and the discolorations will show clearly.

·    Bouncing floors – In older houses, the floors are sure to have at least a small amount of give when you walk across them.  However, too much give can mean sagging or unstable supports.  Generally, it’s a good idea to look at the supports no matter how small the amount of give is.

By following these pointers alone, you’ll have a better chance of picking up good real estate investment property rather than a money pit.

Bookmark With