A great way to diversify your portfolio and make some extra money is to invest in real estate. Before buying your first investment property it is always wise to have some real estate investment strategies in mind. Savvy real estate investors look for properties that are below market value. A good way to find these is to look at buildings that are foreclosures. Some buildings that have been foreclosed on will be ready to rent or resell immediately at a profit. In order to sell some properties you may need to do some updates or renovations before they can be sold. Working with a trusted real estate agent who specializes in foreclosures, knowing what types of real estate you are interested in investing in ahead of time and making the best deal you can is the best way to come out ahead.

There are many different investment strategies so it is best to learn some of them before you being investing in real estate. The startegy most real estate investors use is the one that can lead to the most problems. That real estate investing strategy consists of buying properties which the investor believes will soon increase in value due to market-wide appreciation. Although this strategy can be used successfully, it is based on pure speculation and can fail. There are three investment strategies that can be used and are based on facts instead of speculation. The first is known as the bargain purchase. Many investors will often buy a property at twenty percent below market value by using the bargain purchase method. When purchasing foreclosures people can make up to twenty percent profit using this real estate investment strategy.

The second strategy is known as the increase value strategy. The building would be sold at the current market value using this strategy. There must be some improvements that could be done within a six month time period that would increase the value of the building by twenty percent for this strategy to be successful. Lastly, there are many investors who use the double digit cap rate. The double digit cap rate strategy is used for buildings that have a capitalization rate of ten percent or more. The net operating income from the property divided by the purchase price is the captalization rate. Unless the market is depressed or you loooking into small market niches, these can be hard to find. Whatever type of real estate investing strategy you choose it is wise to have a real estate agent on your side who can help you make the right decisions and tell you of any new listings, including foreclosures that you may be interested in.

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