If I were going to invest in the downtown condo market I would probably look for the best deal possible with the idea that you can rent out the property for a long period of time until the property values start in increase again which in this market could be anywhere from 2-5 years at the soonest.  Overall though with the right deal they can still be a decent investment, but there are other, better options out there.

We aren’t going to buy a $5000 dollar house, instead the way to go is to find a few more people that want to do some small investing, but only have $5000 as well and you all pool your money together to purchase a house to flip.  That way you spread the risk out over a larger group of people.  This isn’t just a matter of having everyone pitch in $5000 dollars though, you need to structure it properly so that everyones small investment turns into a large one down the road.

So what are the best small investments?  They are going to be homes in the $30,000 dollar range where you have 7 or 8 people each throwing in their $5000 dollar contribution giving you a total of $40,000 to work with.  That will give you the initial $30,000 to purchase the property and another $10,000 dollars for updates, repairs, and carrying costs.  If you spend your money wisely when doing upgrade and repairs you should be able to sell the property for around $60,000 dollars when you’re done.  Giving you a net profit of $20,000 dollars that then gets split between the 8 initial investors.  When you divide up that return each person will get $2,500 dollars.  While $2,500 dollars doesn’t seem like a lot of money, it is a 50% return on your initial investment which is a great return!  When I do a real estate flip on my own I usually shoot for a 15-20% return and you’re more than doubling that.

After your group does two of this type of real estate investment you’ll have doubled your original small investment and can either double the amount of homes you want to flip, or just keep going at that pace until each of you has enough to go out on your own and either continue to flip properties or purchase your first rental property in cash.

There are a few considerations that need to be addressed before you go around asking for $5000 dollars from people.

1. Form an LLC and make everyone equal partners
2. Put one person in charge of finding the properties
3. Assign tasks to all other people in the group
4. Communicate

Small investments are a great way for beginner investors to get their feet wet in real estate without having to take out a loan or borrow money from a family member to get started.  Remember some of the best small investments I’ve seen where deals in the $20,000-30,000 dollar range so I’d start there.  Another great way to cut costs is to find a real estate agent that could be part of the group.  That way you are reducing your costs of buying and selling the property and you’ve also got someone with some experience to help with finding that perfect first small investment.

1. Overseas doesn’t mean middle of nowhere.  Make a list of the top 5 countries you’d like to vacation to and then research each one carefully.  Chances are if you want to vacation there so do other people which will make it much easier to rent out.  People also pay a lot more money for a vacation rental than a typical 12 month lease which is another plus for you.
2. Financing.  You’ve really got three choices in this department.  You can pay cash, go to your local bank and ask for a loan, or you can check with the local country you choose to purchase a property at and get a loan through them.  My personal choice will always be cash when investing overseas.  However I know cash isn’t an option for the majority so my second option would actually be talking with a bank in the country you want to invest in.  The reason for this is those countries actually want people to invest in them and are open to talking with you to help get more people investing in their country.
3. Finding the right property.  This is probably the hardest part.  You’re going to have to do some research and find a real estate expert in your country of choice to invest it.  Google will be a huge asset here because chances are the best real estate agents will have websites.  Interview a few different agents before making a decision.  Having one you can trust should be your number one priority.  They can make or break your overseas property investment.
4. Local laws.  Check to see how the local laws there differ from the United States.  Things such as how your property fits into the trust and how taxes are paid are things that need to be researched and figured out BEFORE you purchase a home.

Hopefully this will be enough to get you started in your overseas property investment career.  If you have any tips to add of if you’ve been investing overseas and have some suggestions on ideal places to purchase your first one please leave a comment below.

Before we start though I’m going to just put a giant disclaimer out there though. Being a hard money mortgage lender is very risky. While it’s still backed by a real estate property, the hassle that can come along with this type of investment is a lot higher than your standard real estate flip or rental property. Approach with caution.

What are hard money mortgages? – They are a type of high risk mortgage where real estate is used as collateral. They have very high interest rates and a persons credit score isn’t considered at all. The borrowers income, employment, or savings also aren’t looked at. The interest rates very, but can range anywhere from 15-25% with annual APR’s as high at 30%. The terms are also very short. The research I did showed that most were 1 to 5 year loans. the LTV (Loan-To-Value) is around 50-60% which gives a lot of security to the lender. A good example is that if you have a home that is valued at $100,000 dollars you would be able to borrow between $50,000 and $60,000 dollars in cash.

Who are hard money mortgage lenders? – Hard money lenders are typically people who have a lot of liquid cash and can afford to take a high risk loan. If they are willing to go through the hassle it can be a win-win for them. They either receive a very high return on their money (15-25%) or they acquire a property that is work double what they loaned out. That is what makes hard money mortgages so appealing to a real estate investor. They often times get a nice property worth quite a bit of money if the borrow defaults on the loan.

It’s important to remember that hard money mortgages aren’t state or federally regulated and most likely you’re hard money lender will be a local individual. Usually the people who need these types of mortgages have extremely bad credit and would never quality for a standard “asset based” mortgage. It’s important to approach these deals with caution as an investor because the hassle is a lot greater that investing in real estate like we typically talk about. For some it can be worth the risk and hassle though, especially if you end up with the borrowers property.

Now the big question. Would I ever be a hard money mortgage lender? Probably not and that’s because I’m extremely conservative and because I hate stress. Would I ever take out hard money mortgages? Not a chance, but I know not everyone has been as fortunate as I have with money.

My personal favorite thing about being part of an investment property group is the comradery that comes with being part of a bigger group that has the same goals as you.  Being around other motivated investors is a great feeling and keeps you moving forward.

Another great advantage of being a part of a group like this is the insider deals that seem to come together.  One investor might be getting out of the game and selling off his properties.  Being in that group gives you the first shot at purchasing them.  It also constantly keeps in contact with a large group that might be interested in purchasing any of your investments that you’re looking for cash out on.

No matter how you look at it being part of an investment property group is a great idea and can really help you get the most out of investing in real estate.

Now that I’ve warned you that property manager fees aren’t everything, lets actually get to the fees. Below is a list of fees for residential properties only. Commercial properties are a whole different ball game and will be the focus of another article all together.

Rental Property Management Fees

• 1 -4 Unit Properties – 10% of monthly rent
• 4+ Unit Properties – 8% of monthly rent
• Vacant Units – 0% of monthly rent

There are some other costs that are pretty typical for property management companies to charge.  One is a placement fee for new tenants that they place in each unit.  This price is 50% of first months rent, assuming a 12 month lease.  So for example if you had a rental property that you wanted to rent for $750 per month, that first month the property management fees would be $375.  Most companies won’t take the 10% and the 50% in the same month, so the next month you would start paying the 10% fee.  If a tenant decides to stay after that first year, companies will charge around 10% to renew a lease which is a great savings to you and should be some incentive for you to keep your units nice and your tenants happy which falls back on the property management company and why you need a good one.

Property Management Fees - Maintenance

The going rate is currently $25 per hour and that doesn’t include any of the supplies or materials needed to repair whatever is broken.  Most companies will give you the option of having your own guy for repairs, but most of the time it’s easier to use the property managers guy even though his fees might be a touch higher than you could get if you handled it yourself.  Convenience has it’s price and that’s especially true when it comes to 24 hour maintenance calls and not having to deal with those at 2:00AM.

That’s pretty much all there is to property management fees.  They aren’t near as complicated or as confusing and some investors make them out to be.  If you have properties that are over 8 units in size most companies will begin to give you a greater discount and lower that 8% of monthly rent.  As I mentioned in the beginning, these are only residential property management fees and we’ll cover commercial fees in an upcoming article.

I knew real estate was one of the best investments of 2009 and I was pushing really hard to buy a multi-family home to rent out during that time.  I was pushing so hard that I started to not follow my own advice and got tunnel vision on a property I was dead set on getting.  I stopped looking at the numbers are just looked at how “cool” it would be to own this property because of it’s design and location, neither are great reasons by themselves to purchase a property.  I could of got the property for around $120,000 dollars and it needed around $25,000 in repairs.  It was a nice 3 unit that would rent well, but the monthly expenses on the property were almost $3,000 because of the cost of heating, insurance, etc.  In the end my real estate agent talked to me and got me to open my eyes on how this wasn’t one of the best investment options for me.  Which brings up a great point.  Surround yourself with other people who are investing, even if it’s just your real estate agent.  It’s always harder to miss something when you have two or more people looking at it.  After moving on from that deal it was back to looking.

It took another 6 months before we found another property I thought was worth the effort.  2009 was long gone, but real estate, specifically rental properties in this case are still some of the best investments for 2010.  The new property I had found was a 2 unit for half the price of the property mentioned above, let me say that again, half the price.  It also needed very little work, I’m currently estimating around $5,000 total in repairs.  The house is in amazing shape and even has a garage and fenced in backyard for the tenants, two things the previous investment I looked at didn’t have.  The property is currently rented for $1,200 total between the two units.  If you do some rough calculating at the mortgage payment on $70,000 dollars you’re looking at approximately $400 – $450 dollars.

• $1,200 Income – $450 Mortgage Payment = $750 Positive Cash Flow

That’s $750 in positive cash flow each month.  Over $8,000 profit after a year.  If you were to put all that money back into the mortgage and take no profit every month.  You would turn your typical 30 year mortgage into a 5 year mortgage saving over $55,000 in interest.  Are you starting to see how real estate is the best investment?

Obviously this is a very simplified look at the process and costs and at the end of the day it might not be quite that great, but so what.  Let’s say I go conservative and it takes me 10 years to pay off that 30 year mortgage.  In 10 years on this property alone I’ll pay it paid for free and clear and by then rental rates will have increased so I’ll most likely be bringing in around $1600-$1800 per month easily.  The trick that I’ll even call a secret was mentioned in the first paragraph.  Take your time and set a budget, then stick to it.  That’s the secret to making real estate the best investment.

How can you go about determining the amount of inside knowledge that you can hope to gain from any one particular investment property specialist? You might try asking that specialist how frequently he or she attends City Council meetings. You should learn how often that specialist goes to Council meetings in the locale where that specialist claims to have his or her eye on the various pieces of investment property.

Now the reader of this article might be asking “What is the link between council meetings and investment properties?” Well, at council meetings city leaders often discuss zoning issues. Changes in the zoning laws can affect the desirability of a property then on, or about to go on the market.

For example,if a change in a zoning law is going to limit the amount of parking in a given area, then anyone who is thinking about purchasing property in that area should be informed about that planned change. Now someone who buys investment property does not have the same concerns as someone who buys commerical property. In that case, the buyer must be sure that any potential customer will have a place to park.

Still, a piece of investment property can diminish in value, if it looses some of the parking space in the vicinity of that same property. Suppose, for instance, that an investor were to put money down on an apartment building. Then suppose that the parking space around that same building was somehow cut in half. That would make it harder for tenants to entertain guests, or to park a second (or third) family vehicle. Thus, fewer families would be interested in renting an apartment in that newly purchased building.

In addition to getting information about possible changes in a zoning law, members of the audience at a city council meeting can learn about other considered changes. What might some of those changes be, and how could they affect the persom who has put money into a piece of investment property?

What To Expect From Investment Property Specialist

Well, if an investor sees some vacant land in the vicinity of any investment property for sale, then that investor needs to proceed with caution. City leaders do not like to see vacant property within the municipality that they help to oversee. They often look for ways to make use of that property. The “use” to which they put that property could be one that has the ability to dimish the monetary returns enjoyed by others, particularly those who have invested in any nearby properties.

At a city council meeting, an observer can also learn about any contractor who might hope to “mastermind” major changes, changes in one part of the city. The part of the city that is of interest to one contractor could be the section of the city where you or another investor plans to purchase some property.

An investment specialist should have his of her ear tuned to talk about any rumblings that came from a money hungry contractor. That specialist should be able to gauge what the public response might be, and how the city council might react to that response.

An investment speicalist should also be familiar with whatever environmental regualtions might exist in a particular city. Sometimes, in the interests of sustainablity, a city mandates use of recycling bins at various pieces of investment property. Someone who specializes in investment property should have his or her finger on the pulse of the local, enviromental causes. In order to “feel” that pulse, such a specialist should plan to attend some city council meetings.

Finally, an investmet specialist should be aware of any plans that foretell of the introduction a new transportation system into a certain municipality. After all, if a noisy commuter train is going to go past a certain investment property, then there could be fewer people willing to rent out space in that same building.

Getting High return investment property is doable if you are willing to put forth a lot of effort, research the marketplace, and have a good sense of timing. If you have a little luck even better.

Before you go for the high return investments through research be careful because some programs or people are promising you that they have a guaranteed program for earning money in real estate. They may even promise that you can earn fast cash by purchasing homes in areas that are foreign to you. These are the programs to stay alert to.

How To Get High Return Investments Overseas

If you are shopping for property to buy overseas, research the market to find predominant real estate areas and property. Check the real estate value in the area that you are interested in. Professional investors are available to advise you of real estate value.

If you want to venture into real estate on your own, it is important that you start by looking in areas that are emerging into the investing opportunities. You can learn more about those opportunities quickly by making the right moves.

Avoid the web sites online that promise you High return on investment opportunities fast. If the claims you can get high return investing advantages with outstanding returns you may be walking into a situation that will cause you severe loss. Sites that claim that they can promise you high investments and post vague descriptions of their results, or actions are usually poor sources to start investing in.

High returns investment are found in India, China, Brazil, and various other emerging countries. These countries seem to offer the most promising returns in oversea real estate. These markets are relatively stable and offer reliable economical policies.

You want to avoid opportunities in the areas where it is prone to continuous political unrests or those areas that are soaking in social or currency problems. Considering all of these details can help you invest in property in areas that are profitable. You can also reduce your risks by learning where to invest in real estate.

Match your high return investments with your goals. Once you decide on your investment choices and goals, you will be able to match your investments with your goals and purchase land that yields high returns.

Do not expect that you will make a return of 20% or higher in the first year. It is reasonable to expect a 10% return however.  To reduce some risks in high return investment consider when to buy real estate overseas. If the market is lucrative, it may be a good time to buy. If the market is down it may be a good time to buy as well, because you may be able to buy property cheap.

You may receive high returns on some opportunities when investing overseas. Track your property closely. You should research information to find external and inside influences, e.g. the currency value, or natural disaster, global housing crisis, or related factors. It could affect your value in high return investment

If you work for someone that is a professional broker, discuss your floor rates in which you are willing to offer before you start investing in any property. To get a high return investment from real estate, you must be willing to learn and work.

There will always be a need for basic housing. Cities with schools, busy commerce areas, and new opportunities will attract new residents. These people will make a range of income. Real estate properties can be purchased within several price ranges to accommodate different types of tenants or buyers. Here are some tips on making the best investments for 2010.

The best investment rates can be found by searching for loan funding first. Having the funds already available will make it easier to go through with real estate deals. Putting in several real estate offers, only to realize that there is no immediate funding available will cost both time and money. Always try to obtain financing for real estate properties first, before putting in offers.

Mortgage brokers with experience can help first time or seasoned real estate investors find the best interest rates. There are mortgages available for those within all credit ranges. Having a higher credit score will result in being able to obtain the lowest interest rates. The best real estate funds often are from companies that are competitive. These competitive lenders usually provide affordable interest rates for investors with average to good credit scores.

Single Family Homes

There are people always looking for a place to live. Families often consist of more than one person. The need for space may be from entering into a new marriage, having children, or gaining new children through a blended family. Retirees and single persons may desire the company of one or more pets which requires more indoor living space. Single professionals may have the desire for a home office and guest room. A basic home that is close to schools with a nice kitchen, bathroom, and a yard will rent or sell if priced correctly.

Real Estate Investors

The single family home with three or more bedrooms is the most popular form of residence. This layout accommodates the best living space for families. Homes that will be used as rental properties needs to be versatile. Two bedroom homes are harder to rent or sell.

The best investment companies can be found through referral or from experienced real estate agents. Internet searches can reveal local real estate investment companies that are willing to work with investors. Single family residences can be found under market value. There are sellers in every market that need to get rid of their properties for any number of different reasons. Bank owned properties that have not sold are also easy to acquire. Receiving an acceptance on a written offer may require putting in several offers to the bank or credit union. Use these tips to help find the best real estate investments for 2010.