Creative Real Estate Investing: 4 Basic Strategies You Should Know

by Joel Teo

Published on this site: August 5th, 2006 - See more articles from this month

Creative Real Estate Investing refers to those methods of purchasing and selling real estate that are considered rather unconventional. The answer to the question whether the techniques are unconventional largely depends on whom you ask. While professional investors argue that the techniques below are fairly commonplace, the naïve investor might regard them as avant-garde.

This article will highlight four ways to make more money from Creative real estate investing.

1. Start out Bird Dogging

   One of the most prominent, and rather scientific, creative real estate investing technique is "bird-dogging". Birddogs are crucial in the current real estate scenario. They doggedly search for profitable deals for other investors in exchange for a petty referral fee. Though bird-dogging is not much of a lucrative career opportunity, it's still probably the best way to kick start one's real estate investment career. This is because, if an investor can master the art of finding profitable assets, he/she will always be a notch ahead of his/her contemporaries.
   
   Thus, this strategy is best if you have very little capital to start with and want to learn how to invest in real estate without risking your own capital. The knack of spotting a great real estate investment comes with practice which you can gain in this manner.

2. Using Options to Control Property rather than own
   
   Ever traded in stock options? Trading in options is also applicable to real estate. A property owner fixes a price for an asset, and then may sell an option for prospective clients to buy it on or before a set date in future. The buyer of the option pays a premium for it, hoping that the property will experience an increase in valuation. The buyer may then exercise the option by buying property, or he may sell the option to someone else.Options are a fabulous way to gain control over a property without the need to mete out scads of cash.
   
   You would therefore realize that looking for a property that has a "bad luck" seller that is trying to sell as fast as possible and doing simple and cheap things to spruce up the property would provide the basis for healthy profits in this case. Note here you have not spent a lot of money to purchase the option to buy so it is not capital intensive.
   
   
3. Using Foreclosure investing to buy property on the cheap
   
   Foreclosure investment is another creative real estate investing technique. When a property owner defaults on several successive occasions, the lender may foreclose the loan and opt for auctioning the property. The first step of the foreclosure process is the filing of the notice of default, which normally takes several months. During this prolonged procedure, a foreclosure investor might step in to stop the foreclosure. He may buy the concerned property from the owner who, being financially distressed, may sell it at a low price. The investor may then sell the acquired asset at a significant profit.
   
   You would want to avoid purchasing the property without inspecting it prior to an auction since Real Estate Law presumes that you have constructive knowledge of anything that could be reasonably discovered upon an inspection of the property so you would want to spend some time to check out the property with a good property inspector before diving into the deal.
   
   
4. Rehabbing cheaply and selling the property at a huge profit
   
   Another lucrative, talked over and creative real estate investing
   technique is termed as "rehabbing". This method involves buying a typical fixer-upper (a house that requires enhancement or refurbishing and usually sells at a below-market price). Sometimes the fixer-upper may not require much renovation, and slight ornamentation and paint could suffice. At other times, significant amount of work might be needed to convert a shabby house into a fine abode. Since this field intrinsically involves more risk, and often more work, it typically offers loads of
   profits.
   
   The best way to learn how to do this is to spend some time watching the Reality TV shows that do an extreme makeover for properties to learn how people make run down properties look really great. If you are pleased with the new look of the property and the valuer thinks so to, then you can ake more when you sell the property.

In conclusion, creative real estate investing when taken in the broader context involves you taking some time to learn all the various real estate investment strategies used by the best real estate investors out there and putting it to work. Always play to your strengths and choose a strategy that invokes the best in you and you will succeed in whatever you do.

Joel Teo writes on several financial topics and ways on making money including Property Investment. His website, http://www.realestateinvestment101.info/Property_Investment.html
provides a wealth of informative articles and resources on everything you need to know about Real Estate Investing.