Creative Real Estate InvestingCreative
real estate investing is a term that relates
to the various ways you can buy or lease property
beyond the traditional “find a property,
make an offer, arrange a mortgage and take
ownership of the property”. Some of
the techniques used in this form of investment
includes buying foreclosed properties, buying
at auction, using equity in one property to
finance another, arranging for prior owners
to leave finance in the property and other
“no money down” techniques.
Another factor in creative
real estate investing is where it is possible
to combine a rental property investment business
with other related business. This can mean
becoming a real estate agent, which is a relatively
short process and can be a useful tool to
have to increase your ability to realize profits
in real estate, or perhaps you can combine
real estate flipping with a contractors business
you already own. The knowledge that you gain
through real estate investing is a sellable
commodity, and as you become more successful
so your advice will become more valuable.
Foreclosures are possibly the
best ways of generating a spot of creative
real estate investing action. In Texas for
example it is possible to pick up housing
properties for the cost of a few years worth
of overdue property tax. The great thing about
these types of properties is that firstly
your investment in the property is minimal.
In some recent cases houses worth more than
$120,000 have been purchased for around $12,000.
In some cases the house is sold back to the
original owner once the monies owed, and additional
costs have been recovered; in other cases
the title transfer to the new owner is absolute
and due to an clause in Texan law the previous
owners are the ones responsible for any outstanding
mortgage payments due on their original loan,
not you. It pays to do a bit of research on
your intended purchase before heading down
to the local council steps for the auction
of your intended property, but it is still
a good way of picking up good property at
a really good price.
Using your equity in one property to finance
the purchase of another is one of the mainstays
of creative real estate investing. This can
occur when you buy the first property at below
market value; make improvements to the property
or increase the value of the property in some
other way, and then use the increased equity
in the property as security to get money to
make a deposit on another property.
1031 property exchanges can
be an excellent way of reducing the amount
of capital tax made on the sale of a property.
If the investor can show that the money from
the sale of one type of property is going
to be used to purchase another similar property,
and the transaction goes through a qualified
intermediary, it is possible to defer the
paying of capital gains tax on the sale of
one property, until after the sale of the
subsequent property.