Real Estate Investing Strategies - Part I - Short Term Investment
 
All investors have different outlooks and financial goals. Some look for long-term profits, while others aim for quick gains, and some investors try to create dependable cash flow. Here’s a brief overview of real estate investing strategies associated with each, with the first installment examining short term real estate investing.
 
Short-Term Real Estate Investment
If you're looking to be paid off on your investment in, say, under a year, there are really two options available to you: flipping real estate contracts and construction/renovation of properties to immediately resell. Each strategy involves a different set of skills, but both require that you buy low, so we'll begin there.  

First of all, you’ll need a realtor, to provide you with listings of available properties but more importantly to give you an educated opinion on neighborhood values. Ask around, do some research, and find a serious, career real estate agent who is intimately familiar with the specific neighborhood/market that interests you.   Second, talk to wholesalers, but beware: they’ll all try to sell you their contracts or properties, but sometimes you might find a good deal from one. To find wholesalers, talk to a few local hard money lenders, who deal with wholesalers all the time and may even sell wholesale properties themselves.  

Flipping Contracts
Once you've found them, learn as much from wholesalers as you can, because that's about to become your business. Good ones find deals at 55-65 cents on the dollar, and immediately resell them for 85 cents on the dollar without any ownership exposure.   But remember that any contract you sign as a buyer, you may be stuck with if you can't find a buyer before the contract expires, so be prepared to settle if need be.

Which means, of course, that once you do settle, you might get stuck with the property for a while, so be prepared to rent it out, if need be. This is why it's so important to buy under market value, because you never know what might happen with a property.  

But back to business. Now that you have a property under contract, you need a buyer, and fast. Start by talking to your realtor, and see if she knows any investors actively looking in that neighborhood. Next talk to a few loan officers who specialize in renovation loans, because their clients are all investors. You might try Craigslist, if only because it’s free. Talk to those hard money lenders again, as they work with hungry investors all day.  

Final note on contract flipping: ONLY flip to professional real estate investors. Homeowners will usually look for conventional financing, which usually doesn't allow flipped contracts. 

Construction/Renovation
First and foremost, make sure you have an honest, reliable contractor available (easier said than done). Some of those same contacts from above can usually recommend a few, if you're having trouble. Get several quotes on each job, to make sure you're not being taken for a ride. For all construction and big renovation jobs, always use a licensed contractor, and always have them pull permits from the local municipality.  

For financing, you have two reasonable options: hard money lenders or local banks, depending on your time urgency, credit, and income. Hard money lenders are much more expensive, but reliably fast and efficient. Either way, make sure you're not undercapitalized, because without money it will take twice as long and end up costing you twice as much.  

A few small things that can make big difference when renovating real estate, even in lower end neighborhoods:
1. Jacuzzi tub: they’re not much more expensive, and people love them.
2. Off-white paint: beige, tan, blues, whatever, make it tasteful but different.
3. Central Air Conditioning: if possible.  

As we discussed above, there’s a chance that you won't be able to sell the property, so always be prepared to lease it out as an rental if necessary. Here's a good site for free landlord rental forms, property management resources, and real estate investing articles.   Good luck, and remember to network, because you'll learn a great deal from the contacts described above.

Real Estate Investment Strategies - Part II - Long Term Investment

Real Estate Investment Strategies - Part III - Cash Flow