Day 53: Consider Real Estate Investing

Scripture to Memorize:
She makes linen garments and sells them,
and supplies the merchants with sashes.
She is clothed with strength and dignity;
she can laugh at the days to come.
Proverbs 31:24-25
Passage to Read:
Wisdom, like an inheritance, is a good thing
and benefits those who see the sun.
Wisdom is a shelter
as money is a shelter,
but the advantage of knowledge is this:
that wisdom preserves the life of its possessor.
Ecclesiastes 7:11-12
Prayer:
Dear Heavenly Father, thank you for your gift of wisdom. Each day as I see the sun rise help me to seek to learn new things and grow in wisdom. Your Word says that wisdom is like an inheritance. It s something that I can pass to other generations through my child and grandchildren. Help me learn something new every days so that I can impart valuable insight to those I care about. Your Word acknowledge that money is a shelter but it will not preserve my life. Guide me so that I keep my priorities straight. I want to develop a financial shelter but wisdom is even more important, so help me keep it as a priority. Help me to keep all of life in balance. In the precious name of Jesus, Amen.
Personal:
Donna today suggests that we consider real estate investing. That is purchasing real estate with the intention of selling it for a profit. She states "the Proverbs 31 woman earned money in real estate". This woman bought a field and earned a profit on it. This is a smart move that people still make today. Donna tells us that "80 percent of wealthy people earned their wealth through real estate." Plus according to Donna this is something a woman at home can do with little effort and using her computer and the Internet. Donna then gives examples of people who have done what she suggests successfully. One in particular was Tamera Aragon who made a large income only to lose it and her health as well. She sought guidance from God and studied the book of Romans. This allowed her to have a closer relationship with Jesus and through his guidance and the help of a book entitled "One Minute Millionaire" by Mark Victor Hansen and Robert G. Allen. She used the advice in the book and diversified her income. In addition to keeping her income diversified she shares information on real estate investing. Her list of the most popular real estate investment strategies are:
Cash flow/rental properties: These are investment properties that generate income from rent. Advice is to start out small with a small starter home and eventually move up to apartment buildings. ADVANTAGES: One of the easiest ways to get started, rental properties produce monthly income and are likely to be a good long-term investment plus they appreciate in value.
DISADVANTAGE: You run the risk of not renting the property, plus property management can be challenging (collecting rent, fixing leaking toilets, evicting difficult tenants and so on). Payoff is slow.
Lease Option: This is when you buy a property, then find someone who wants a rent-to-own arrangement. ADVANTAGES: You can get higher rent and the buyer is usually responsible for maintenance. Cash Flow can be good. DISADVANTAGES: Most rent-to-own buyers don't complete the purchase. This can actually be an advantage in the long run, but it does mean more work for you. Bookkeepingmust be done properly.
Fixer-uppers: You buy a place in ugly condition that needs renovation. You fix it up and quickly resell it. ADVANTAGES: You can receive a quick return on your investrment. You usually buy below market values, so you have instant equity and can use a home equity loan to finance the renovation. DISADVANTAGES: Higher risk. Many unpredictable expenses come up in construction (just watch some of the property flips on HGTV). Also you have no guarantee how long it will take to sell or what price you'll receive. You get taxed heavily on the gain if you resell in less than a yearl..
Vacant land. You can buy land and just hold it while it appreciates or you can buy and subdivide for resale. ADVANTAGES: History has shown that land always appreciates in value. It is simplier than most real estate investments with the possiblity of great profits. DISADVANTAGES: It can take a long time fo land to increase in value. You have expenses but no cahs flow while you wait.
Forced Appreciation.: Buy property in the path of growth and hold it until values rise. For instance, buy a vacant lot in a residential development prior to roads being completed. When the roads come in, the price goes up, and you sell at a profit.
Preconstruction: Buy directrly from a developer before the constructgion or renovation is completed when prices are low. ADVANTAGES: You may have to put up only a smal amount of money to tie up the property while it's being built. If purchased in appreciating markets, you make money in equity at closing and can instantly resell at a profit. DISADVANTAGES: You can't always predict what amarket is going to do. If market depreciates, you have lost money. You'll also get hit hard at tax time if you sell in less than a year.
Foreclosures: These types of investment properties are the ones you buy from sellers who are behind in their payments an may lose their property to the bank via foreclosure. ADVANTAGES: You have opportunities to buy properties at below value pricing, creating instant equity. Then you can turn around and sell the property for a substantial profit.
DISADVANTAGES: Legal liabilities are higher. Finding these properties requires a lot of research and footwork to find a deal that works. You can do all the work and still not have a deal with enough equity to profit after expenses (taxes, Realtors).
Donna suggests you pick the method that most appeals to you and then DO YOUR HOMEWORK. Donna and Tamera suggest Realtors, lenders, bankers, attorneys, home inspectors, and others plus a good mentor. There are also several sources of real estate classes, CD, DVDs, seminars, and books. Tamera and Michelle host a free online webcast for more information visit www.donnapartow.com/realestate . Donna reminds us that the purpose of this Jumpstart is to get us thinking about the possibilities.
For me personally I already know that this requires more money than I care to risk in investments. However, I have known people who have done very well. This is particularly true if you have an in at a bank or credit union who can alert you to properties that are about to be foreclosed on. You may have to do a little fixing up, renovating, etc. I once had a co-worker whose wife worked for a bank that did home mortgages and she would let him know when and what properties were about to be foreclosed on. He would then purchase the likely one that needed little repair and fixing up and resold them. Some one who is not so close to retirement and who has the money to invest this can be very profitable.
Affirmation: I consider a field and buy it.
Practical:
This is one suggestion that I won't take the risk on.