Two All Time Strategies For Real Estate Investing

Real estate investing is dumb. Really, see what happens after a mortgage crisis. If you just buy real estate because everyone says it’s cool you are making a stupid mistake. Real estate investing is dumb when done in the way everyone does it.

Photo by lumaxart at Flickr

If you put some thought into it however it might turn into a tool offering one of the best risk/ROI ratios in the investment world. I have two general strategies which work in almost every real estate market and almost independently on the current market conditions. The strategies are simple and not secret and they are quite involved. This is what makes them so good – no matter how many people know them, very few are those who use them well, so there is plenty place for you if you wish to try.

Buying Land And Homes Around Expanding Cities

In most developed countries like UK people live around the big cities instead in them since years. Same tendency is now seen in East Europe and Asia which opens big opportunity for investing in land around the big cities. There is opportunity in the Western countries as well, but you need to work harder in finding the right places. In the developing countries there is an exact pattern which shows you where and when to invest. Here is how the raise of the land prices happen in most cases:

1. The country economy starts growing fast. People start having more money
2. People move to the big or capital cities and start buying homes. Home prices start increasing quick for 2-3 to 5 years
3. The home prices in the big cities become too high for many citizens, the cities gets crowded. At this stage the people start looking for homes near the cities instead in them and the price of homes and land there increases quickly

So, basically when everyone invest in homes in the big cities because the ROI has been high for several years, it’s time to start looking for property around the cities. In a short period of 2-3 years the prices of the near-big city homes increases more than the home prices in the cities have been raising in the best market time.

This strategy requires careful research and watching the home prices in the big cities of developing countries. You can try to apply it in USA as well but guessing which will be the next expanding city is a tough task.

Buy Land And Change Its Purpose

This strategy is simpler to explain but requires more work on your side. Agricultural land is cheaper than the land for commercial or residential buildings. Often it is much cheaper. And pretty often its purpose can be changed. If the land is around a city or town, has good infrastructure and there is a different (building) purpose around it, most countries laws will allow you to change the land purpose. Most common practice is to buy agricultural land and change its purpose to a land for residential property – this can double or triple the land’s price.

There is a lot of bureaucracy, fees and risk in doing such purpose change. It highly depends on your country and state local laws. But if you are willing to do some work, research and spare no expenses on legal consulting, you can see a return of 100% in an year or less doing this.

Can you share other timeless strategies for real estate investing? Don’t run away from good opportunities only because they require work to implement. If an opportunity requires more work and research this is a sure sign that the lazy investors will be out of the deal making it much better for you.