Short-Term Real Estate Investing: A Guide

Short-term investing is a popular strategy that many real estate investors use. They find distressed properties, fix them up, and then sell them for a profit. Based on certain tactics used, this can be very lucrative. Read the tips below to find out how you can move properties for profit.

1. Decide if you will repair the properties that you purchase before re-selling them. And if so, how you will do it.

Will you pay a contractor to refurbish the homes you buy, or will you be doing the work yourself? Don't take on huge projects that cost you more time and money than you are willing to invest.

2. Assess each property you are considering purchasing.

By knowing the value of similar properties in the same neighborhood, you can get an idea of what the home is approximately worth. Appraisers do this as well. If the homes you are looking at have less value than similar homes, find out why. Then you can decide if you want to profit from an additional refurbishing investment. This will increase your profit, should you decide to fix it up and sell it.

3. Do not pay more than 75% of the retail value of any property.

Give yourself room to make a profit.[1] When you underestimate repairs and other costs, it is easy to go over budget. This directly affects your profit margins.

4. Use a grant deed to transfer the property.

Grant deeds state that the property has not been sold to anyone else and that the grantee is the sole owner.[2] Also, the grantor guarantees that the title is free from any defects that may affect the title. Furthermore, if you are purchasing property from someone who is married, you may want the spouse to sign a Quitclaim deed. The Quitclaim states that the spouse will not try to claim the property at a later date.

5. Use a third party service such as an escrow or an attorney to pay all liens and mortgage holders to ensure that you will receive the deed.

This acts as a second witness; thereby adding warranted creditability that indeed the transaction was conducted.

6. If the property you are buying has other lien holders or mortgages, get in touch with them and make them an offer of 50% of the balance.

They will be happy to recoup a portion of their investment on the sale that otherwise could have been a total loss.

7. Another example of a short-term real estate investment is to sell rehab properties for wholesale without fixing them up.

Sell them to other fixer-upper buyers who are willing to do the work and profit from their refurbishing investment. Your margins will be lower, but you possibly can move more properties this way.[3]

8. Research Hard Money Lenders to find out if they can lend you the money for short-term commercial and residential investments.

Hard Money Lenders are private lenders. Look for ones that service your geographical area. And do not forget to check out their reputation, know their criteria and then decide if this option is best for you.

9. Educate yourself by reading recent books on short-term investing.

One book you may want to consider reading is, "Buy it, Fix it, Sell it: Profit: A Comprehensive Guide to No-sweat, Money-Making Home Rehab", by Kevin C. Myers, published by Real Estate Division Company, a Division of Dearborn Financial Publishing, Inc. Visit your local library for this book and others on the subject of short-term real estate investing.

10. Consider using the services of a real estate agent to sell your properties.

Real Estate agents often have the inside story on trends and geographical opportunities. You could enlist their professional services to sell your properties or even find properties for you. Get their rates in writing. In a way, you are partnering with an agent to make your investments a win-win situation.

Whether you are considering purchasing distressed properties to refurbish and re-sell, or just "as is" fixer uppers, you can make a profit. Arm yourself with knowledge and start with one property at a time.

[1] http://avalarworldproperties.com.agentsna.com/p/14524/Distressed-Properties.aspx. Accessed August 19, 2008
[2] http://homebuying.about.com/od/titleinsurance/qt/REdeeds.htm. Accessed August 19, 2008.
[3] http://www.legalwiz.com/7-ways-to-flip-a-property. Accessed August 19, 2008.