For Sale1

Last week’s newsletter discussed the current state of the residential real estate market and the potential for profitable real estate investments. While not as bad as it once was, the real estate market is still not back at its pre-2008 levels. This is good news for real estate investors because there is still plenty of time to take advantage of the business segment calls a “generational opportunity in wealth building”. Residential real estate is an excellent investment alternative to stocks and bonds. One of the most important factors of real estate investing is that it comes with a certain level of security. Once a REO property is purchased, renovated and restored, its value increases when it is brought to market. This allows for a significant potential return on investment. As an individual real estate investor, you may find that you are beating the bushes. Making countless bids on properties. Giving your best and final offer several times. And, finally winding up with one property to either renovate and sell or renovate and maintain as a rental property. However, you may find that the job of general contractor is more than you bargained for. Some “fix and flip” situations end up taking much longer than expected and can cost more than originally anticipated. As an individual real estate investor, it can be quite difficult to yield the return on investment that you originally wanted. For individual distressed real estate investors that want to find better opportunities to purchase REO properties, there is an alternative. By investing in a company that specializes in bulk note purchases, you can end up with a true advantage. Companies that specialize in real estate pools are able to work directly with asset managers charged with disposing large blocks of properties at pricing well below what individuals can obtain on the open market. These companies also have management, systems, contractors and vendors in place to handle required property renovations. Once renovations are complete, these companies have relationships with real estate agents that know the market. They also regularly work with property managers that specialize in serving the role as a landlord. Many individual real estate investors do not realize the responsibilities of being a landlord when they are new to the REO industry. There are multiple ways to invest in distressed real estate. When you choose to invest in a real estate fund, you can rest assured that your capital is backed by undervalued property that is managed by professionals that specialize in the business. This provides you with simplicity. You are able to participate in a business segment that allows for potentially great returns – without the stress associated with individual distressed real estate investing. Additionally, investing in bulk note purchases provides you with diversity. Pools of properties are purchased in multiple markets, allowing for investments to be spread across a broad range of assets. Next week, we’ll discuss diversity and what it means for the Investor.


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