As surprising as it may seem, investors are snapping up "deals" as fast as they come on the market. Often times going for much more than the listing price.
Why?
The market turmoil has created a perfect storm for many investors. With rents continuing to rise and fewer buyers able to borrow, many investors are seeing above market returns on their investment.
How do they do it?
Traditionally there are two strategies utilized by most investors, "Fix & Flip" or "Buy & Hold". We belive there is a third strategy that creates a better risk/return ratio that we will discuss in a moment. First, we will look at the first two:
1. Fix & Flip - This can often be the riskiest of all strategies but can yield outstanding returns to the shrewdest amongst us. If you have excellent analytical skills, a good knowledge of your market and nerves of steel, this may be for you.
2. Buy & Hold - This is probably one of the most tried-and-true methods of real estate investing. This provides the investor an opportunity to "leverage" his/her investment by financing their "project" and allowing for amortization along with appreciation to increase their position over time.
Our favorite new strategy is the one being promoted by Desert North Realty, LLC. They have taken an old concept, Lease-Option, and placed a new spin on it. It is a hit with both the investor and lessee/buyer.
They simply provide an opportunity for someone to pick out a home of their choosing, lock in an option price for a predetermined amount of time and negotiate a fair market amount for rent until they excersize their option. The investors love the fact they can benefit from the "buy & hold" strategy without dealing with all the issues that come with owning rentals.