Investment Properties- Short, Medium & Long Term Strategies

By
Real Estate Agent with BuyLowAZ

"Focus" by Craig Jewell - http://www.sxc.hu/profile/CraigPJ

 

Since the market is ever-changing, it's nice to have several different investment vehicles. There is a time value to investing. It's always good to find strategies that can pay off in the short, medium and long term.

Among the activities many investors employ are these.

Short-term: Currently, there are many opportunities in purchasing properties at wholesale. Here's a for instance- let's say there is a neighborhood where homes are selling near $200k. The homes were built in the early 1960's. The neighborhood my have a home or two that is in disrepair. If the homeowner has a tremendous amount of equity but is facing a five-digit repair bill to bring the home to market-ready condition he/she has a decision to make: Fix and sell at full value or sell at a discount to a re-habber. Selling to a rehabber will bring an immediate sell but at a rate that is discounted. That discount will be Market value- (repair costs + rehabber profit). Some home owners will find the time benefit worth the cost reduction. Investors will have the decision of selling such a home at a slight profit to a rehabber or becoming the rehabber to enjoy more profitability. Wholesaling is a short term strategy while rehabbing is medium term.

Mid-term: There is a market for those who wish to purchase property under rent-to-own arrangements, also known as leasebacks. Here's an example- A condominium project sells units for $200k. There are those who are unable to qualify due to poor credit. The project owner sells units in bulk for $175K to investors willing to participate in a leaseback arrangement. Poor-credit clients enter a program allowing them to purchase a unit in one year after demonstrating an ability to pay on time and keep other finances in check. The investor receives monthly payments plus the possibility to sell the unit to the occupant at a pre-approved future price. The renter earns better credit and the opportunity to live in their future property. The condo owner is able to procure a present buyer and future resident. The investor has current cash-flow and near-future profitability. The investor needs to make sure that there are no "gotcha" clauses and that the opportunity is legitimate. Be careful- some investments look too good to be true.

Long-term- This one requires time. Most real estate properties tend to be worth more over time. If someone buys low, time will eventually reward holding on to the property. Someone who purchased two years ago may very well have "lost" money. In a few years the situation may have reversed itself. Those who have a knack for purchasing will notice the condition of the neighborhood and the potential for population growth. Those who buy homes at a monthly rate below current rental rates will earn cash flow. Holding on the property over time should allow for future rental growth and increased cash flow. Selling after the property has appreciated will bring even more profitability.

Experienced investors tend to take approaches that satisfy short, mid and long term profits.

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Chuck Willman helps investors find properties in the Phoenix, Arizona metro area. www.AZvest.com

It is the nature of blogs to be written to explain current market conditions. Future readers will discover conditions whose elements have changed. All investments require due diligence.

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Rainmaker
139,407
Ron Largent
Real Estate and Gas Stations America - Redding, CA
Real Estate and LegalShield

Chuck...you have some great points here...points that I will use in a class that I am teaching in the fall at Simpson University here in Redding, Ca....and I will give you the credit for pointing them out.

Thanks, and keep up the good work.

Ron Largent

www.ronlargent.com    ronlargent@kw.com

Jul 19, 2008 05:44 PM #1
Rainmaker
259,999
Mara Hawks
First Realty Auburn - Auburn, AL
Inactive-2012 REALTOR - Homes for Sale Auburn Real Estate, AL

Chuck, you've explained this so well--- even I can grasp it! I love that you are educating the Buyers / Investors, so they can make well-informed decisions, and, I'm sure, will remember you for your expertise. Well done!

Jul 19, 2008 10:37 PM #2
Rainer
73,244
Pam Pugmire
Silvercreek Realty Group - Meridian, ID
Meridian Idaho Real Estate

There is some great info here for investors.  I prefer the long-term strategy because then you can sell when it's a good time, not because you have to. 

Jul 19, 2008 11:42 PM #3
Rainmaker
268,858
Chuck Willman
BuyLowAZ - Mesa, AZ
Realtor - Arizona - 480.292.0600

Ron- Very cool... in credit do you mean credit hours? (kidding of course).

Mara- It's only slightly difficult... I'm glad I did it some justice. The key, I'd say, is diversification.

Pam- I like long term also... especially when your long-term turns quicker than you expected.

Jul 23, 2008 07:27 PM #4
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Rainmaker
268,858

Chuck Willman

Realtor - Arizona - 480.292.0600
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