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New and experienced investors can reap real estate rewards

6/3/2016 | Real Estate Blog

An active real estate investor and a conservative saver might meet at a real estate club and work together to each get a higher return on investments than either is accustomed to. The conservative saver is a person who has traditionally put money into vehicles such as certificates of deposits and savings accounts. There might be a few stocks and bonds as well, but the return is low.

Active and experienced real estate investors may vary in their investment strategies and needs, but there are three common ones. One is the long-term rental mortgage. While there are traditional lenders available for this, a passive investor might still be interested in contributing funding. Money is needed for a short time, usually a day, for a wholesaling investor purchase-to-sale. In a fix and flip, the funding is required for both the purchase and the rehab. This investment can provide good returns quickly with only a moderate amount of risk.

The saver and the experienced investor might go in together on a fix and flip deal. The entire process may take around three to five months. The investor is about to get a loan from the saver at a lower interest rate while the saver makes an amount that it normally takes a year to accumulate in just a few months.

This win/win situation might be enhanced by working with an attorney. A new investor is unlikely to know many of the details of residential or commercial real estate investing, and as a passive participant, it might be valuable to have someone to manage contracts and other legal issues. However, an experienced investor may want to work with an attorney as well. Real estate purchase and investing can be complex, and it could also be helpful to have an attorney available in case any litigation becomes necessary.