Making money in Real Estate investment is like what we call in the stock market investment circles made in the buying and this is also known as value investing. The difference between stocks and real estate is that we can actually purchase the property and make changes to it unlike in companies unless you buy a substantial share in the company.

This article will highlight three different ways to purchase real estate investments at a bargain from the market price.

Method #1 - Private Sales

Purchasing property from private owners is good because you avoid the competition from other purchasers at auctions. The advantage of this method is that, sellers usually are facing foreclosure or other cash flow problems and might sell you the real estate at a bargain in exchange for quick cash.

Real estate investment type property usually involves good rental property, so a good start would be to look for real estate in an area that has high rental proceeds. Spend some time understanding the needs of the private owner and you may be able to negotiate a lower price for your real estate investment than the market. Several things that may indicate that you can negotiate for a lower price include, owner migrating out of the state, owner in debt and needs the money, or property looking old and not maintained. Take note of these things and get a better price for your real estate investment.

Method 2#- Sell and lease back

There are many businesses that bought their property during the property boom and now face a liquidity crunch. These businesses then sell a property to an investor for cash, then lease it back for a long period of time at a rent which gives the investor a 9 to 10% return to the buyer. Your focus in this deal is to establish a monthly cash flow when you do your real estate investment in this property.

The inherent risk in this real estate deal is the fact that the tenant may give up the rent and as a result, the valuation of the property might drop after that. Always take this into account when accessing this type of real estate investment property.

Method #3 - Foreclosures

Purchasing foreclosure property can be good for real estate investment because sometimes, depending on how long the loan is outstanding, the bank might want to release the property at a price under the market valuation so as to sell it off. Banks at a minimum have to sell the property enough to cover the outstanding mortgage and anything over the price will go to the owner and usually sell these properties via auctions.

You would want to spend some time looking at the foreclosure property before you bid for it at the auction. Call a representative from the auction house and go down and take a look at the property. If you are the top bidder, always be prepared to give a check of 10 percent of the closing price otherwise your bid will not be upheld.

In conclusion, we have shown you three methods to purchase property at a discount to the market value. Remember that the money is made in the buying and you would want to try to purchase the property at a discount to the normal market so as to be able to resell it later for a profit.

By Joel Teo 2006 All Rights Reserved