Various Friends and Family members have pensions through work, they pay in around £300 per month and this gives you a pension of around £108,000 of your own money if you work there 30 years. Now say the company you work for matches that money, that’s £216,000, after 30 years of work and an annual pension of just £10,800!

Ok, say I can show you how to have a decent sized pension and you needn’t put anymore than around £300 in… interested? The Answer is Property Investment, more specifically Buy to Let.

Take a £200,000 flat in Manchester. Buy at a 15% discount (lots of these deals around!)

Rent at £1000 pcm.
Management fee of £100 pcm
Take home £900 pcm.
Buy to Let Mortgage at 5.8% of £200,000 = £1,185 repayment pcm.

This will cost you £285 per month.

Say property goes up a conservative 5% per annum over the next 30 years. In 2037 that same property should be worth £864,388 and you will own it outright! As far as rental income is concerned. Taking a rental increase of 5% per annum you should receive around £4321 pcm or £51,852 per year.

Now I know that your pension scheme will also increase in value, however, the actual monthly or annual return is not what interests me. The point that interests me is that your retirement fund will decrease as time goes on. Say you manage to save up £500,000, in 20 years time, taking an annual income of £25,000 all the money is gone!

Using Buy to Let Property as your pension, the property retains its value and you get your income from the rental of that property. So not only do you have a property worth £864,388 which you can draw on whenever you need, you also have a yearly income of £51,852.

Saying that, I would like to end up with a balanced portfolio, I have some money in Shares and would like to add to my portfolio as well, perhaps the secret is not to put all of your eggs in one basket?

In conclusion, the safer bet would seem to be a pension scheme, but I will point out that over a historical average, property has doubled every seven years, this is around 5% per annum. The same goes for rentals.

A friend of mine recently bought his first house and was amazed a year later when he came to remortgage, that it had risen £30,000. He pointed out that this was more than he made in a year, to which I pointed out….imagine if you had 2!

This guest post was written by Dan Chamberlain. If you have any questions or responses to this article, please post a comment below.

An off plan property is a property that is sold before it has been constructed and where the buyer only have the property plans provided by the architect as a guidance of how the finished property is going to be. Today off plan property refers more or less to all new developments that are sold before the termination of the construction of the property and not as it used to be only properties in the initial stage before the construction had started.

One of the biggest differences between a resale property and a property in a new development is the seller. Off plan properties or new developments are sold directly by the developer whereas traditional resale properties are normally sold by a private owner.

What are the advantages of purchasing property “Off Plan”?

Reserving a property at Off Plan stage (typically you will have just the Architects floor & site plans, elevations and specification to base your decision on) has proven popular with a variety of investors and home-buyers for many years.

Buying property Off Plan offers a number of benefits. The major benefit and attraction for potential purchasers is the capital growth which can accumulate from the Off Plan stage through to physical completion of the property.

For example, you could reserve an Off Plan property and secure a price of £200,000. If the property takes 12 months from the time of Off Plan reservation to build completion and the property market increases in value by 10% per annum, the value of this property upon completion would increase to £240,000.

Another factor to consider in this time is that no mortgage will be required until completion, so no monthly payments to make through the build process. Purchasers can benefit from substantial gains in capital growth in a buoyant market by committing only a nominal reservation fee and exchange deposit. The introduction of exchange bonds further minimizes capital outlay, where the buyer pays a bond premium which guarantees the developer a payout of the equivalent of the exchange deposit sum if the purchaser does not complete on the property.

Many property buyers will not feel comfortable to commit to buy a property which they can not physically see, inspect, etc. This provides a great benefit for astute buyers who can secure the most desired plots at Off Plan stage. For example, the plots which offer the best views (may not suffer from noise from nearby roads, trains, etc. compared to others on the same development which may). It goes without saying that the most desired plots in a development will be the ones to benefit from the greater gains in capital growth. Off Plan investors could also secure a prime plot which will maximize their rental return and minimize void periods.

Buying Off Plan can also provide investors with substantial profits on their initial capital outlay over a relatively short period. The source of profit in this instance coming from the capital growth through the build period. I refer you again to my previous example indicating the potential increase in property value in a buoyant property market.

Particularly if an investor had the opportunity to reserve a prime plot Off Plan in a development, the capital growth would be maximized in comparison to less desired properties which in turn should maximize your chance of achieving a quick sale at the market value at that time. A similar principle can be applied to completed property, but mortgage payments would have to be paid from the outset. This could potentially eat into investor profit, particularly if the property was not let or there was a shortfall in rental income in comparison to mortgage payments and associated ongoing costs.

In conclusion, buying property Off Plan can provide many benefits for the astute investor and home buyer alike. This is particularly a popular option in a property market where values are rising and buyers are confident in the rise continuing until at least completion of their chosen property.

This guest post was written by Dan Chamberlain. If you have any questions or responses to this article, please post a comment below.

Now with the increase in interest rates and the decline of many buy to let mortgages numerous investors have stopped investing in buy to let and are instead looking at other avenues like overseas, flip sales and re-possessed property.

Does this mean the end for buy to let investment? Well let’s look at the factors. The first thing you learn about in any Business Course is the simple principle of demand and supply.

Less Supply + More Demand = Increase in Prices.

More Supply + Less Demand = Decrease in Prices.

So how can we be talking about the decline of Buy to Let if demand is so high, has supply really outweighed demand?

I do not think it is as simple as that, true, there is high demand for property at the moment, and true, this has driven prices up in the last few years. This in turn has led to many properties being priced out of potential purchasers price ranges.

So with property being so expensive now it is harder to purchase a buy to let property that will guarantee you a decent yield. Is it possible to find a way to satisfy the demand for property without increasing interest rates to such a level that you create a slump in prices there by making property more affordable?

Could increasing interest rates not be a double edged sword? Let’s say we have a 1 bed flat at £150,000 that a First Time Buyer wants to purchase, on an 85% LTV mortgage he will be paying approximately £610 pcm. Say the Bank of England increases the interest rate to 6.25%, so a 0.5% increase.

Also let’s speculate that this has a detrimental effect on property prices and they fall by 10%. That same 1 bed flat is now worth £135,000, so if a First Time Buyer was to buy on an 85% LTV mortgage his monthly payments are now £597.

A £13 difference for the First Time Buyer but a nightmare for everyone who already has a variable rate mortgage!

So the problem we have in this country is that there is maybe too much demand for property, this leads to the rises in property values we have had over the past years being achievable where in many other countries a collapse may have happened a long time ago. I think that the Bank of England knows this, they realise that the situation must be monitored closely but any thought of a crash are very premature.

The future may not be rosy but it is not all doom and gloom either. I believe that the slowdown has for the main part helped the property market, stabilising prices and injecting a sense of reality into investors that were gearing themselves too highly.

This guest post was written by Dan Chamberlain. If you have any questions or responses to this article, please post a comment below.

I was actually one of those real estate investors who purchased a single family home during the boom and rented it out for two years before having to sell at a small loss. I honestly was lucky to sell (my house was on the market for 4 months) and only did primarily because I offered seller financing. The person who ended up buying my house had poor credit and couldn’t qualify for a loan which gave me a distinct advantage over the dozens of other houses on the market. Not only that, but I had a great realtor by the name of Geri Martucci at Keller Williams who helped me market the property using many different channels and methods.

So having been a real estate investor in Las Vegas, I discovered a free site called Property Hookup that lists undervalued houses for sale in the Las Vegas area. For a property to qualify for listing on Propertyhookup.com it must be discounted a minimum of 20% off of the real market value. Their site lacks a professional look and feel but their listings seem pretty up-to-date.

You can browse their listings and even sign up for their bird-dog email which provides the latest discounted properties. I personally haven’t signed up nor am I looking to purchase another property in Las Vegas but if you’re looking for a bargain and can hold it for a few years, this might be right up your alley.

I also received a personal email from one of the employees at Property Hookup and they offered up a special deal for anyone looking to sell their property. I am happy to pass this along to our readers.

As a special attempt to help reach out to all the real estate professionals out there I would like to offer this very special deal. Send me your under value or discount real estate listings and I’ll post it them www.PropertyHookup.com absolutely free. Our www.PropertyHookup.com emails go out to over 15,000 Las Vegas active real estate agent and investor email addresses each time. That’s nearly every agent and cash buyer in town.

Email me at: Kallen [at] PropertyHookup.com. Here is what I need:

1. Please send only real discount properties. Fixer Uppers, foreclosures, and motivated sellers are exactly what we like. We’ve got to keep the deals good in order to keep the real buyers tuned in.

2. Send me the link to your listing so I can get the photos and property info. Let me know how much you think it is under value. I’ll run some comps to double check your value.

3. Let me know your thoughts about our www.PropertyHookup.com. If there is anything we can do better, I need to know.

4. Make sure your contact info is prominent. Any interested parties will be contacting you directly. Make sure you ask them where they saw the listing.

5. I’m giving you our exclusive www.PropertyHookup.com listing and audience ABSOLUTELY FREE! Just for being an existing member of our investment group. Just make sure you tell me as soon as its sold so I can pull it down.
It’s as easy as that. I’ll do the rest.

LET’S GET EM SOLD. Thanks for your time. Stay tuned! I hope to hear from you soon.

Kallen Kildea
702-499-2608

If anyone ends up using this free site and has any comments, please add them below!

It is easier to start investing in single family homes than apartment buildings. If you have done so, however, you have noticed how difficult it is getting to get positive cash flow from houses. Even if you do squeeze a little out of each, it can take a lot of them to have a decent income.

Like in a Monopoly game, at some point you may want to trade in your little green houses for a big red apartment building. One apartment building may provide as much cash flow as twenty little houses. And once you have management in place it may be a lot less work.

How To Buy An Apartment Building

Rule number one? Buy properties that will have positive cash flow from the start, based on the current income and all of your projected expenses including management. If the current owner doesn’t have management, that is his problem. You are an investor, not a manager, and a good income property should pay for management and still produce positive cash flow.

Do your due diligence? Here’s a simple definition of the term: “Investigation and verification of the details of a particular investment.” You can start this process before you make an offer, but you should also have clauses in the offer that allow you to have inspections done, and reviews of the books and certain documents.

Look at the files, to verify income. There should be rental agreements signed by tenants, and rental histories showing if there are any problem tenants or late payments. Look for rental deposit documents also, to see amounts and where the deposits are kept.

Ask to see service contracts and agreements. Do they transfer, or are you free to seek better deals? These can include property management agreements, landscaping, snow plowing, pool cleaning service, and cooling system maintenance agreements.

Get the last 24 months income and expense statements, and look for anything unusual, like expenses that are too low or income that seems too high. Review the rent roll, and find out if the rents are over or under the market rates for the area. If there are employees, look at the payroll records for any surprises, like accrued vacation time that you’ll have to pay.

Do an interior inspection to learn about the place, the tenants, and any problems that you will have to fix in the coming months or years. Look for pests, water and fire damage, as well as obvious “problem tenants.” Are there any empty apartments that are listed as occupied? Use professional inspectors as needed for pest inspections and safety inspections. The local Fire Marshall may do a free inspection to verify that the building meets current codes.

For the exterior inspection, you will want to first walk around and take notes. Watch for anything that looks unusual or in need of repair. Then you can get professional inspections, if necessary. You want to verify that the electrical and plumbing systems are up to date and meet current codes. You also want to get an estimate on how many years of use the roofing has left. You’ll look at driveways, landscaping, and exterior paint condition.

Call local authorities and check for any permit problems or zoning or encroachment problems. If there have been fire code violations, were they corrected?

Get the help of an accountant to decipher the books. Have a lawyer review your offer and any documents. Ask what other things you should be doing.

Take notes, and list problems, and estimated costs to correct them. You can use these notes during subsequent negotiations. The problems investors run into when buying income properties are usually not unforeseeable. They can be avoided or resolved if you just do your due diligence. Use a checklist so you won’t forget anything.

Prices are based on income. When buying apartment buildings, many investors will look at the “cap rate” of a property to determine if it is a good investment at a given price. Not sure how to figure capitalization rates? Just be sure that there is more income coming in than the total money you’ll be paying out each year. Then make sure that this cash flow is enough to justify the cash you invest.

Now, Mr. Rozzen says he is considering filing for bankruptcy protection. As the housing market slowed, the 40-year-old was unable to sell the homes, and his full-time job as a real-estate agent was no longer able to support mortgage payments totaling $45,000 a month. So one by one, over the past 14 months, Mr. Rozzen has stopped making payments on his investment properties, for which he paid between $226,000 and $390,000, and lenders have foreclosed.

As a result, Mr. Rozzen’s credit score plunged from 730 to the high 400s, he says. The Prada clothes, luxurious vacations, and full-time housekeeper and pool cleaner he once enjoyed are things of the past. Still, he says, walking away from his investment properties was his only option. “You get to a point where your hands are tied,” he says.

A growing number of investors like Mr. Rozzen are making the drastic decision to walk away from their properties and ultimately send their homes into foreclosure, lenders and real-estate agents say. Many investors who were hoping to quickly flip their investments are now left with homes that can no longer be sold for more than the mortgage debt. In many cases, these investors can’t even find tenants willing to pay enough rent to cover hefty mortgages.

Certain data point to the trend. According to an August study by the Mortgage Bankers Association, defaults on mortgages where the owner doesn’t live in the house are a major driver of the defaults in Florida, Nevada, California and Arizona — four of the states with the fastest rising rates of seriously delinquent loans. Defaulted mortgages are defined as those 90 days or more past due or in foreclosure, according to the study.

But walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.

“A lot of these people can’t think clearly because the level of financial distress is so great,” says David Dweck, president of the Boca Real Estate Investment Club in Boca Raton, Fla., who is also a Realtor. “They’re hoping [that by taking this step], it’s going to work itself out.”

Tom Crossett is one investor on the verge of walking away from his properties. At the height of Florida’s condominium boom two years ago, the 53-year-old air-conditioner contractor from Delray Beach, Fla., bought four units with the plan to flip them quickly. He paid between $143,000 and $173,000 for the units.

Mr. Crossett now says the developer of the complex that sold him the converted-from-apartment units reneged on many of the promises, including extensive renovations, making them a tough sell. To help make monthly mortgage payments totaling $4,000, he’s been stuck renting the units to tenants who make sporadic payments. He says that next month, he plans to cut his losses and stop paying the mortgages. “The only way I can see for me is to just get out, stop the bleeding and let them go,” Mr. Crossett sighs.

Before walking away from a mortgage, legal experts say, investors should approach a lender about a possible loan “workout,” in which the mortgage payments are reduced but the investor gets to keep the property. Some investors say they have tried this, but without success. Still, banks don’t typically want to act as property managers, nor do they want to have high foreclosure numbers on their books.

“There is a real incentive for both lenders and borrowers alike to do a workout and avoid foreclosure. Lenders are not good at being homeowners,” says Fred Witt, national director, real-estate tax services, at Deloitte Tax LLP, in Phoenix.

One of the first effects of walking away from a mortgage is an assault on one’s credit. The foreclosure could remain on your credit report for years and will sharply reduce your credit score, experts say. “This makes it more difficult or extremely costly, and in some cases impossible, to do more financing in the future,” says Jack Guttentag, a professor of finance emeritus at the Wharton School of the University of Pennsylvania who operates a mortgage-advice Web site.

In some cases, lenders can go after an investor’s other assets to satisfy a loan if the borrower defaults. But that often depends on the loan agreement, which sets out what recourse the lender has in the case of a default. In a nonrecourse loan, lenders can take only the property itself to satisfy the debt. Most loans, however, are recourse loans, which means that the borrower’s other assets may be at risk.

Cutting Loose
Some real-estate investors are considering walking away from their mortgage loans. Here’s what to consider:

• An investor’s credit score could be sharply impaired.
• Lenders may go after your personal assets.
• Part of the loan amount that is forgiven could be considered taxable.
• Before walking away from a mortgage, consider seeking a loan “workout” with your lender.

Individual investors may even be on the hook if they borrowed through a limited liability company or a partnership. Principals of LLCs, or general partners of partnerships, can be personally liable if they act as guarantors; lenders often require personal guarantees as part of the loan agreement.

“Banks want the individuals on the hook,” says New York lawyer Gideon Rothschild. Partnerships and LLCs are good to “protect you against slips and falls on your property,” adds Jay Adkisson, a Newport Beach, Calif., lawyer, but they offer little protection if a lender requires you to sign a personal guarantee.

What’s more, whether other assets, such as insurance policies and personal residences, are shielded from creditors varies widely by state. In Florida and Texas, for instance, your home, life-insurance policy, annuity or retirement plan are generally shielded from creditors. California, by contrast, offers much less protection for debtors. (More details about your state’s laws are available at www.assetprotectionbook.com/state_resources.htm.)

Of course, investors can take steps to shield their assets from creditors. But setting up fancy structures, such as offshore trusts designed to keep property off limits from creditors, typically only works if done before creditors appear on the horizon, says Beachwood, Ohio, lawyer John E. Sullivan III. Similarly, assets in a 401(k) are generally protected from creditors if the plan was already in existence. “If you plan when the coast is clear, you should be OK,” says Mr. Sullivan. “If you choose to wait, it could be too late.”

Mr. Adkisson, the Newport Beach, Calif., lawyer, says he has received about 30 calls a week in recent months from real-estate investors seeking to shield their assets, just as lenders are beginning to chase after them. “There’s just an absolute flood of people seeking asset protection, and it’s all after the fact. It’s like buying auto insurance after the car wreck.”

There are a few things you can do to protect your money even as creditors are moving in. One idea: Move to Florida and buy a big house. As long as you can stay out of bankruptcy and qualify for Florida residency, a creditor can’t force the sale of your home under Florida law, says Mr. Rothschild, the New York lawyer, who adds that the tactic won’t work under new bankruptcy rules if you’re forced to file for bankruptcy protection.

Investors who face foreclosure may be left with a big federal tax hit, says Mr. Witt, of Deloitte. That’s because, in a recourse loan, the amount of the loan forgiven by the lender, in excess of the property’s fair market value, is typically taxed as ordinary income to the taxpayer, he says.

The tax code does offer some relief, but only if the loan is forgiven during bankruptcy proceedings or if the borrower was insolvent immediately before the loan was discharged. However, it’s tough to prove insolvency, since the Internal Revenue Service considers many assets, such as 401(k) retirement plans, in determining whether a borrower is insolvent. “These assets are typically exempt from creditors, but not for tax purposes,” says Mr. Witt.

One option to avoid, if possible: filing for bankruptcy protection. Laws passed in 2005 make it much tougher in some cases to protect certain assets, such as your primary residence, from creditors during bankruptcy.

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Invest smart
You need to study the Real Estate market well before finalizing the property in which you want to invest. The key areas where you should focus are: condition of the house, locality in which the house is located, prevailing rentals in that particular area, infrastructure of the area in terms of availability of recreational, health, and transport facilities in the area. Resale value of a house located in a developed area is huge; hence, prefer buying a flat in a developed locality.

In case your budget doesn’t permit you to buy an apartment in a posh area, then there is no harm in finding options in an under-developed or developing area, provided you study the area plan well.

Understand your need
For a smart investment, it is important that you understand your need well. For instance, if you plan to live in the property that you are planning to buy, it is wise to buy a house with multiple units. Such properties help you lower down cost of living and utilize rents obtained from other parts of the property to pay mortgaged loans, if any. In case, if you are looking at buying a property that is already on rent, make it a point to assess the records of the tenants before finalizing the purchase.

It is better if you take professional help to identify your needs and formulate a suitable plan of action, and then execution. A Real Estate broker, with his rich experience in the industry and rich database of properties, can help you zero down your search very well.

Choose a finance option
If you are looking out for some financing options to purchase your property, you may visit a mortgage broker, to help you in finding suitable finance options at a good cost. Nowadays, most brokers offer this value-added service to their clients, so that the deal is fast without the client having to initiate the tedious bank procedures on his own. Find out if your real agent has a tie up with a bank or any other financial institutions. You need to however do some comparative analysis to get the best interest rate for a reasonable tenor.

by William King

Houses may be a losing proposition as rentals in your area. They are in many areas now. However, if you find the right kind of home, you may be able to convert it into a duplex and turn that cash flow situation around. Let’s look at an example.

Make A Duplex Investment

First you go to the county or city to find out what residential areas are zoned for both single family homes and duplexes. Take a map and mark it well, so you won’t waste your time looking at houses that you’ll never be able to convert. You don’t want to try to get properties rezoned for small projects like this – it just isn’t worth the trouble and probably won’t succeed.

Suppose you find a 3-bedroom, 2-bath house in one of these areas. The seller is asking $102,000. This is less than the surrounding homes, but it is because the home is in rough shape. You don’t want to tie up more than $20,000 in any one project, so you quickly realize that positive cash flow would be difficult to obtain, since the usual rent for houses like this is around $775 per month. You look at the home anyhow, with the idea of making a duplex out of it.

The repairs necessary are mostly cosmetic. The bathrooms are on opposite sides of the house. There is an office that can be made into a bedroom. There is a natural place to divide the house that will leave a dining room on one side – which will become a living room – and a living room on the other side. One end of this living room will be used to make a small kitchen.

You will end up with two 2-bedroom units, which rent for about $630 in this area. The vacancy rate for the area is 5%, so you project an annual gross income of about $14,360. Taxes, insurance and repairs will be about $4,660, leaving a net income before debt service of $9,700.

You have already checked, and know that you can borrow 90% of the value of a duplex, at about 8% interest on a 30-year loan. You figure (roughly – all of these numbers will need to be firmed up before closing) that you want cash flow of at least $1,800 per year. Subtracting this from the $9,700 leaves $7,900 for debt service. Dividing this by 12, you see that you can have a payment of up to $658 per month.

Now you pull out your amortization book, and turn to the page that says 8% interest. Working your way down the monthly payments column under “30 years” you see that you can borrow up to $90,000 and still make your plan work. Since you don’t want to put more than $20,000 of your own money into the deal, this means the whole project has to be done for $110,000 or less.

Roughly estimating the construction costs, clean-up costs, holding costs, closing costs, loan costs, refinance costs (once the project is done) and other expenses, you figure your total costs will be around $23,000. When you make your offer, you will have an inspection contingency that allows you to cancel the contract if there are problems that put the likely cost beyond this.

Subtracting $23,000 from $110,000, you arrive at a figure of $87,000. You know this won’t thrill the seller, but this is the price you need to make the deal work for you. You offer $83,000, and he counter-offers at $93,000. You offer $85,000 and drop the clause that had him paying $2,000 of the closing costs – you had only put it in there as a negotiating tactic anyhow.

Eventually, when he realizes that you really will walk away from the deal, he agrees to $88,000. You decide that this is close enough. Your inspections and quotes come in and you are satisfied, so you close. You borrow only 80% of the value to avoid mortgage insurance and points. You intend to refinance when you have the place ready anyhow.

You find some cheaper ways to get the job done, and the total costs up to the day you rent the units is just $20,500. This means you have total of $108,500 into the duplex. You shop around and find a new loan at 7.5% interest. You also decide to finance 90% and have less cash flow. You like the idea of having only $11,000 or so of your cash invested.

You borrow $97,650, making your payment $682 per month, or about $8150 per year. This leaves $1,550 per year cash flow – close to what you wanted. Your cash-on-cash return is around 14%, and if rents are rising in the area, it will soon be higher. This is why you might want to create your own duplex investment.

There are usually some easy-to-spot factors that determine these things. In a town like Lone Pine, California, for example, there are huge tracts of national forest land or other government land on either side of town. Since nobody can build on this land, they are left with a narrow strip of real estate alongside the highway. As the area grew, it was no real surprise that vacant lots at the edge of town went up in value.

Of course, highways in general determine the direction of growth in many towns. It is certainly cheaper to build along an existing road than to install new roads to access other land. Stores want to be where the traffic is, of course, which is another reason that real estate fronting highways gets developed before other land.

Sometimes geography determines where the growth will occur. Certainly a town is more likely to grow away from an ocean than into it. Valleys with steep hillsides will fill up the flat lands first. Towns will generally grow where it is easiest to grow. Therefore, real estate in those areas will tend to go up in value more quickly than in other areas.

Real Estate Investing In The Path Of Growth

Of course, you could just buy real estate where things are already happening. That might not be a bad investment. But to really ratchet up your profits, you should be buying ahead of growth. Determine where the buildings and development are heading, and get out in front of it. Real estate that is in the path of the growth will sometimes double in value in just a year or two.

Years ago I lived in a town where real estate in general was appreciating at about 6% to 7% per year. Along one highway, however, the land values went up at almost 25% annually for several years. This means they doubled in value in about three years (and some parcels doubled again as quickly).

You can start by just looking around to see what is happening. But do your home work too. Has the population been growing consistently? Is there good job-growth in the area? Are there other reasons why people and businesses will be moving into the area. What are the most likely directions the growth will take?

At this point, the basic real estate investing formula is to buy in the path of growth and wait. The most difficult part of this plan, though, is not to see where to invest, but to get the timing right. The real estate might be worth ten times as much in ten years, but what if it doesn’t appreciate much in the next three? You might be paying finance charges and have other costs for a long time.

One way to minimize this risk is to buy property that will produce some income – preferably enough to cover these costs. If there is an old house on the property that you can rent out, for example, you might have a free-ride while you wait for a new mall developer to make you an offer. If it takes a few years, you’re still okay.

Just buying in the path of growth and holding on for big gains is pure speculation. it’s true that with enough homework, this can mean big profits. But investing in income-producing real estate lets you wait for your big gains, while limiting your risk.

So what are some key things to look for when searching for a motivated seller? First of all I look for the obvious hints either online or in the classified ads where sellers say things like “must sell… another country next month” or something like “currently paying two mortgages and must sell home immediately”. Now those are the easy ones but for the more typical properties you usually have to call several sellers and ask them some questions such as

1. Are you under any time crunched to sell your home?
2. Is there anybody living in the property currently?
3. How long has the property been on the market for?
4. Why in the world would you consider selling such a wonderful property such as this?

all these questions should give you a pretty good clues as to why and if the seller has a strong motivation to sell. If you do discover one of these properties on your list could be a real bargain you then take the next step and talk with them about pricing and terms. For any real estate deal to ultimately be a winner the numbers must make sense. And lastly take into consideration where the property is located and what condition it currently is in. If all three of these factors add up than it probably makes sense to move forward and make an offer on the property.

Now remember the #1 factor great real estate deals are built on is motivation. The #2 and #3 factors are also important (pricing and location) but don’t fall into place unless the #1 factor comes first.