Real Estate Investing – Is It Possible To Still Make Money?

By: Tina Feston, Atlanta Realtor

Some people may wonder if it is even possible anymore to make money from real estate. The answer is an emphatic “Yes!” Like any other investment, the goal is to buy low and sell high, and by finding foreclosed properties that banks are anxious to unload, you can certainly do the “buy low” part.

The skill you need is to know how little you can pay, and know ways you can purchase distressed real estate while risking little or none of your own money. When people default on their mortgages, the process of foreclosure isn’t instant, or even quick. It is a long, protracted affair during which many legal steps must be followed. Look at it from the bank’s point of view: a borrower has defaulted on his or her loan, has stopped making payments, and pretty soon the bank is going to be stuck with a piece of property that they’re probably going to have a hard time selling. It is far from ideal for the lenders.

When lenders are buried in repossessed real estate and cars, it is a losing situation for them. Every day that a foreclosed house sits empty is a day that the grass grows, the mice get in, and the property values of surrounding real estate drop a little due to blight. Banks are faced with owning an undesirable property whose desirability will most likely continue to drop.

That’s why savvy real estate investors can step in and purchase property from lenders. Even if you only offer a fraction of the asking price, they may consider it, because they have a lot to lose by hanging onto the asset and not much to gain unless real estate in that particular area experiences some unexpected boost, such as a retail or industrial operation locating nearby.

In a slow housing market, obviously people are reluctant to buy real estate. But people still need a place to live, and real estate is the one of the few assets that we have a finite amount of. While some neighborhoods may not like having a rental property down the street, they’d much rather have a rental property than an abandoned, boarded up house that looks worse by the day.

If you are able to buy a foreclosed house for a great price at a decent interest rate, once you make any necessary repairs, you can rent it to one of those people who are averse to buying, and they will most likely cover your monthly mortgage payment and then some with their rent. You’ll be rescuing an undesirable property, making the neighbors happy, you’ll be providing someone a home, making them happy, and you’ll be taking the albatross of undesirable property off the neck of the mortgage lender, which will make them happy.

Successful investing in real estate doesn’t just happen when the market is going up rapidly. In fact, a stagnant or contracting real estate sector is a great time to get in on the ground floor of this type of investment. Business cycles come and go, there is only a finite amount of real estate on the planet, and the world’s population continues to grow. The question isn’t so much “if” real estate investments will pay off as “when” real estate investments will pay off. Successful investment in real estate, like any other worthwhile endeavor, will require brains and hard work, but done right, an investment in real estate can be a sound, long term asset that continues to pay off.