Investing in Real Estate: Non-Traditional Investing Techniques
Real Estate Trading - Real estate is one of the more risky ways to get into investing, but like we've said, high risk tends to mean a higher reward; if you do it right. The basic concept behind trading is buying a property that is either extremely undervalued or priced fairly undervalue in a hot market. They will hold the property for a few months while prices rise and can make thousands in a matter of months without putting a penny into the property. One of the things that can kill a trader is closing costs, since they can add up quickly and you need to pay them twice; once on buying and once on selling. Another major issue with trading, or "flipping", real estate is that once you're invested, the market can cool down.
More recently, investors have been buying and selling properties in an even shorter period of time, putting down a very small down payment and holding the property only until closing. Some states will allow for a "dry" closing, in which the first buyer doesn't need to bring any funds to the table, they buy and re-close in the same day. Most states, however, have outlawed this practice and a wholesaler (as they call themselves) will need to secure transactional financing if they cannot bring cash to the closing table. From there, they close and turn around and sell it within the same 24 hour span. Tax Liens - Tax liens are another great way to get investing in real estate, and tend to require a smaller initial investment. While state laws vary, the basic concept of tax lien buying is that you can buy a lien placed on a home by the county. Counties need taxes to help make their budgets, and homeowners who have gone a certain amount of time without paying these taxes can end up sinking a county into a funding hole. These counties will sell the lien that they are allowed to place on the home, putting the tax lien buyer in a great position to purchase the home. There are many tactics to turn the tax lien into a purchase of the home, but the main goal of buying a tax lien is to collect the high interest rates, anywhere from 12-15%. To learn more great tips on how to invest, and to check out our Denver Colorado homes for sale, visit us at PorchLight Realty.
More recently, investors have been buying and selling properties in an even shorter period of time, putting down a very small down payment and holding the property only until closing. Some states will allow for a "dry" closing, in which the first buyer doesn't need to bring any funds to the table, they buy and re-close in the same day. Most states, however, have outlawed this practice and a wholesaler (as they call themselves) will need to secure transactional financing if they cannot bring cash to the closing table. From there, they close and turn around and sell it within the same 24 hour span. Tax Liens - Tax liens are another great way to get investing in real estate, and tend to require a smaller initial investment. While state laws vary, the basic concept of tax lien buying is that you can buy a lien placed on a home by the county. Counties need taxes to help make their budgets, and homeowners who have gone a certain amount of time without paying these taxes can end up sinking a county into a funding hole. These counties will sell the lien that they are allowed to place on the home, putting the tax lien buyer in a great position to purchase the home. There are many tactics to turn the tax lien into a purchase of the home, but the main goal of buying a tax lien is to collect the high interest rates, anywhere from 12-15%. To learn more great tips on how to invest, and to check out our Denver Colorado homes for sale, visit us at PorchLight Realty.