REI Wealth Monthly Issue 09 | Page 46

10 ROADS TO REAL ESTATE INVESTING PROFITS TAMERA ARAGON 6. Buy Property with Forced Appreciation. Buy in the path of growth and holding until values rise. For instance, buying a lot in a residential development, prior to roads being completed. • Advantages: Can yield large profits, especially if you buy low to start. • Disadvantages: Future price is not predictable – the market can turn, the developer can go out of business. You have expenses with no income while you’re waiting. 7. Preconstruction Investment Property: These types of investment properties are acquired directly from a developer before the construction or renovation is completed. • Advantages: Low money out of pocket to tie up property while being built. If purchased in appreciating markets, you make money in equity at closing and can instantly re-sell at a profit. • Disadvantages: You can’t always predict what a market is going to do. If market depreciates, you have lost money. Also, higher tax rates if you sell quickly. 8. Pre-Foreclosure Investment Property: These types of investment properties are the ones which you buy from sellers who are behind in their payments and may lose their property to the bank via foreclosure. • Advantages: You have opportunities to buy properties at below value pricing – “Instant equity”. • 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 to sell, (taxes, realtors, etc.).