| Plenty of fancy words have been written about real | | | | rapidly rise. |
| estate investment strategies. But I want to cut to | | | | Advantages: With this method, you'll get negotiation |
| the chase in this article. No matter how fancy the | | | | leverage and good profit potential. Also, it can be a |
| language is, investment strategies boil down to two | | | | good life if you enjoy an entrepreneurial life style and |
| objectives:o Buying real estate to accumulate cash.o | | | | a lot of freedom. |
| Buying real estate to build equity and wealth. | | | | Disadvantages: Volume can be low, depending on |
| Which strategy to choose depends entirely on | | | | market conditions so your income can fluctuate. |
| you-your needs, your personality, and so forth. | | | | Although flipping is entirely legal, it received bad press |
| Frankly, either choice is fine as long as you choose | | | | due to con artists making a quick buck by duping |
| one early in your career, commit to it over the long | | | | customers. So, you may need a thick skin in terms of |
| term and do everything you legally can to make it | | | | other people's opinions of you. Another disadvantage |
| successful. | | | | occurs when too many speculators get into the |
| In this article, I'll look at the cash accumulation | | | | market. When that happens, prices drop quickly, and |
| strategies and the pros and cons of each. I'll treat | | | | you end up stuck with the property and no |
| the build equity and wealth strategy in another article. | | | | immediate profit. Another possible downside is that |
| The Cash Accumulation Strategy | | | | interest rates can rise, thus dampening the demand |
| Let's assume you're relatively new to the real estate | | | | for housing. A final disadvantage is hidden property |
| market and need methods for pursuing a cash | | | | problems. If you don't pursue careful due diligence, |
| accumulation strategy. Below are several methods | | | | you can end up with expensive repair costs that eat |
| you can try:o Bird dogging. In simple terms, you find | | | | up your profits or even cause a loss.o Buy and sell |
| good properties for investors and charge them a | | | | as-is. This method is simple: buy a property, leave it |
| finder's fee for doing so. This is strictly a cash | | | | as-is, and then put it back on the market but at a |
| strategy. | | | | higher price. |
| Advantages: It doesn't require any cash on your part | | | | Advantage: When done right, you'll find that the |
| or previous knowledge. It's also the fastest way to | | | | profit margin is even higher than with the flipping |
| earn cash. In addition, it's a great way to "learn the | | | | method. |
| ropes" of the local real estate market. | | | | Disadvantages: This method takes time and, due to |
| Disadvantages: The money you earn per transaction | | | | that fact, volume may be low.o Buy, improve, sell. |
| is the least in the market. It also takes considerable | | | | With this method, you purchase a property, make |
| time and effort to locate suitable properties.o Flipping. | | | | cost-effective improvements, and then sell it at a |
| Flipping is the art of buying property, waiting for the | | | | higher price. |
| right moment, and then selling it for a quick profit. In | | | | Advantage: Margins are even better with this |
| basic terms, you're controlling the property with a | | | | "rehabbing" method than with the previous methods. |
| binding purchase contract. This strategy is most | | | | Disadvantages: With this method, you have a much |
| effective in areas where the demand for housing is | | | | bigger investment time and money than the previous |
| so high that there's a limited supply, causing prices to | | | | methods. |