The 3 Best Real Estate Investing Strategies for 2012

What are the 3 best real estate investing strategies for 2012? After carefully analyzing market reports, studying recent trends and looking at where we are making the most money in the business right now, three real estate investing strategies emerged as the most accessible and the most profitable for the new year. By focusing your efforts on these three strategies, you can make 2012 your best year in real estate ever! That's right, even in this down market, there is tremendous opportunity for you to make a fortune in real estate.

Strategy # 1 - Assign Lease Purchase Options to Rent-to-Own Tenant Buyers

This first real estate investing strategy is a little known technique that is the absolute fastest way to put quick cash in your pocket from real estate. Literally, within a few weeks of reading this, if you apply this strategy correctly, you could have $3,000, $4,000 even $6,000 extra cash in your bank account. Here's how it works:

In today's market, there is a large number of prospective home buyers who can't qualify for a mortgage. Lenders have tightened up, creating a huge back log of people who want to stop renting and own their own home, but simply can't because they can't qualify for a loan. Enter the "Rent to Own". A rent to own home gives the tenant buyer the option to purchase the property while they are renting and in some cases, allows a portion of each payment to go towards the purchase price. For those unable to qualify for a mortgage, it is the ideal scenario. Therefore, the rent to own is in very high demand right now.

At the exact same time, there are hundreds of thousands of properties on the market right now that are not selling. In many cases, the reason why the home is not selling is that the homeowner is unwilling to drop the price low enough to compete with the short sales and foreclosures in their neighborhood. Month after month, these listings sit, with no showings and no offers. Overtime, these property sellers get tired of making payments on a home that won't sell. If offered, they actually would be quite open to a lease purchase option so that they can stop the empty house payments and have the possibility of getting their asking price, even if it is down the road. The problem is that no one is offering to do a lease purchase option on their home. Buyers' agents rarely bring rent to own tenant buyers to listings. Homeowners do not know how to find and handle the details of a rent to own transaction. And many investors can't profit from deals that have no cash flow and no equity.

If rent to owns are in demand and homeowners across this country would be open to a lease purchase option, how do you turn these two factors into money? In simple terms, you bring the two parties together. For most rent to own deals, the option to buy the property requires an upfront payment from the tenant buyer of $4,000 to as much as $10,000 and more, depending on the property. By getting the property seller to agree to a lease purchase option in writing, you then assign your interests in that agreement to the rent to own tenant buyer for a fee; an amount that could be as much as their upfront payment or a portion thereof. It doesn't matter how good or bad the lease purchase option deal would be to you as an investor because you are stepping out of the way and handing the deal off to the rent to own tenant buyer. Plus, since rent to own tenant buyers and property sellers are both motivated to move quickly, these transactions can be completed, start to finish, in a matter of weeks. If you are short on cash right now and need a quick boost to your bank account, the real estate investing strategy of assigning a lease purchase options to rent to own tenant buyers; it'll probably be the fastest money you've ever made in real estate.

To learn more about how to assign lease purchase options to rent to own tenant buyers, become my apprentice.

Strategy # 2 - Foreclosures

The second real estate investing strategy is foreclosures. Industry insiders predict another wave of foreclosures will hit the market in 2012. Improper handling of foreclosures over the past several years led to Federal investigators to review Banks' foreclosure practices and in many cases, found problems. This created tremendous delays and stopped many foreclosures from going through in 2010 and 2011. Banks and the Feds are scheduled to reach a settlement very shortly. When this happens, expect a new flood of foreclosures on top of the massive amount of foreclosures already.

Foreclosures can be a mine field, however. Just because a property is a foreclosure does not automatically make it a deal. In fact, if you pay too much for a foreclosure in this market, you can really lose your shirt! Savvy foreclosure investors know that great foreclosure deals are the needles in the haystack. They exist and may be all around you, but they are a small percentage of the overall foreclosure population.

What's the secret to finding the select few extremely profitable foreclosure deals? Top producing REO/Foreclosure agents. They are the fountain of youth for foreclosures. In any market, there are a select few REO agents that rise above the rest. They close 300, 600, 900 or more transactions per year. From time to time, these REO agents have foreclosures listings that they need a fast cash investor buyer to purchase quickly. If you are on their speed dial for such situations, you're in for a big money making deal. But keep in mind that an agent doing 600 transactions a year is the CEO of multi-million dollar business and to simply think you can walk into their office and start getting their best leads is wishful dreaming. You need to know what you are doing, know what to say, know what not to say and have the ability to follow through when a good deal does come along.

To learn more about how to find and build relationships with top producing REO agents in your market, become my apprentice.

Strategy # 3 - Short Sales

This report would not be complete without mentioning short sales. More than 1 in 4 mortgage loans in this country are underwater. For borrowers in this situation, many will require a short sale. The sheer amount of prospective short sales is gigantic. Plus, there is terrific money to be made in short sales if you have taken the time to properly educate yourself on how to approach them.

The beauty of the short sale is that the property is still owned and controlled by the homeowner. That creates tremendous flexibility for the savvy real estate investor. Some investors negotiate the best deal they can with the short sale lender, buy the property and then resell it for a profit. Others get their real estate license so that they can list the short sales they don't buy and still collect 3% commission as the listing agent. On a $500,000 home, a 3% commission is a very respectable $15,000 payday. Yet another creative way some investors have begun to profit from short sales is to rent out the property to a tenant on a short term lease while negotiating with the bank. Since some banks take several months (even as much as a year or more) to process a short sale request, if the property is vacant and the investor gets the proper disclosures signed by all parties, there is good money to be made in collecting rent on a property that doesn't have an underlying mortgage payment. Short sales have undergone dramatic changes over the past several years and those investors who are on top of their game have adjusted accordingly and are making big money with short sales.

To learn more about how to master short sales, become my apprentice.

Those are my thoughts on the 3 best real estate investing strategies for 2012. What do you think?

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  1. Phil, Thank you for the information & the insight on foreclosures & short sales. However, it is my understanding that any rent-to-own transactions here in Texas (and also North Carolina) should be avoided without good legal counsel & a very good understanding of their requirements. Of course, legal counsel should be sought in all strategies, but from what I can gather, a person has to be especially legally cautious doing rent-to own in these two states. Thanks again.

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