For decades there has been a great debate in the real estate industry. Beginners and experts both argue which investment or business in the real estate sector is the best, single family houses , or multi-family. We would argue that due to sheer protection, income potential, and mass, multi-family is the fastest, safest, and best way to gain wealth. However, you must have a lot of knowledge and power to pull off these bigger deals so to get your feet wet, you should first understand the single-family residence game. For that reason, in this article we will be discussing the single-family residence business and summarizing the home-buying process.
Single Family Real Estate and Sales Process
Real estate is a broad term which basically defines the purchase and sale of a piece of property and all of the things (structures, natural resources, air rights, etc.) that it contains. Within this broad term are more specific businesses such as the commercial, residential, industrial, agricultural, and mixed-used real estate. Each of these can be profitable but let’s talk about the residential real estate business.
Within the single family residence business are some very lucrative real estate endeavors which include:
- Fix and flip
- Buy and hold
- Notes and Deeds
- Short Sales
- Mobile Homes
Fixing and flipping became popular from television shows that explained how to purchase a property that needed renovation in order to resale for a profit. The house is renovated maybe some wooden storage sheds are added, and it is improved to current standards. It is then put back on the market where the investor hopes to make a profit of anywhere from $25,000 to $60,000. Buying and holding houses is a safe investment if you have the money to carry the mortgages in case your tenants leave, and the houses become vacant.
When you wholesale a property, you get the house under contract for a certain price and sell that contract to another investor for a fee. This fee can be anywhere from $1,000 to $10,000 depending on the profitability of the deal. If you invest in notes and deeds, you’re purchasing the “paper” attached to and secured by the property which will give you a certain monthly or annual percentage return on your money. Foreclosures and short sales are a great way to find “motivated sellers” to help them resolve their problems and getting a good deal on a property.
In conclusion in this article we discussed the topic of real estate investing, specifically investing in single family houses. The home buying process is a lot simpler than people make it out to be. You set a budget or monetary target, get pre-qualified by a lender or put the money in an escrow account. You then find a realtor to help you find the property you’re looking for. Finally, you bid on the property or many different properties until an offer is accepted. The closing date is chosen, the needed paperwork is drafted, you go to the closing, sign the documents, wire the money, and close the deal.