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Three Real Estate Investment Ideas

By - 2009

The three real estate investment ideas below are meant for tough markets like the current one (I am writing this in 2009). It is unclear whether real estate values will continue to fall or have already bottomed. But in either case having the right approach limits the risk inherent in falling prices and the slow sales times that some areas are facing.

1. Infrastructure Changes

Basic infrastructure changes can radically affect prices of homes and real estate in general. For example, I recently read a story about an investor who bought houses in an area soon to be serviced by a new commuter rail line. People living there would soon have easy access to a large city center, and the value of real estate there went up 50% in about a year and a half.

Do you know of any areas where new roads or train or bus lines will soon be established? If so, it might be an opportunity to invest. On the flip side, before you make a real estate investment check to see if there are there are any train or bus routes that will be closing soon, since this could drive property values lower.

2. Worst-Case Scenario Planning

When looking at a real estate investment try to think of all possible problems you might face. This isn't just to help you decide if it's worth the risk. It also allows you to make contingency plans. What if the market softens by the time you finish fixing up a property, for example? Maybe you won;t be able to sell at a decent price. Will you be able to rent the house for a year or two until prices rise again?

Think about how you can deal with any potential problem, and take notes. Real estate is one of the more flexible investments fortunately. A particular house might be sold, rented, leased with an option to buy, sold with easy seller financing, rented by the room, made into a duplex, or lived in until prices rise. You should always have a few options available to you just in case "Plan A" doesn't work out.

3. Fix And Flip Quickly

Acting fast when markets are uncertain is a matter of safety. Houses are always expensive to hold onto in any case, and speed reduces those costs. This can be important if you are buying and selling a fixer upper during tough times, and selling as quickly as possible can make a deal work if property values are still falling. Here are a few real estate investment ideas for fixing and flipping homes quickly.

- Create a plan (and take notes) before you make an offer on a property.

- A quick closing should be one of the conditions in the offer.

- Make arrangement with contractors so they can start the day you close or soon after.

- Have a real estate agent and a marketing plan in place before the home is finished and ready to sell.

- Get the property listed for sale and start advertising a few days before the project is done.

- Set the price slightly below the market for a faster sale (again, this saves you holding costs and reduces the risk from falling prices).

In good times or bad real estate investment can be risky. Look for and apply ideas that help you reduce the risk or gain special advantages, like those above.

Here's one more idea: Diversify out of real estate. The following page on the website has many pages of ideas for doing that (and the site also has a section full of pages with real estate investment ideas as well):

Diversified Investments

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Houses Under Fifty Thousand | Three Real Estate Investment Ideas