A great way to diversify your portfolio and make some extra money is to invest in real estate. It is a good idea before you plunge into your first investment property to at least have some real estate investment strategies in mind. Do what most savvy investors do and 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. You might need to do some renovations or updates to some building before you can sell them. The best way to come out ahead is to work with a realtor you can trust and who knows what kind of investment properties you are looking for and also specializes in foreclosures.

You need to learn the many different investment strategies before you begin to invest 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. Three investment strategies that are based on fact and not speculation are listed as follows. The first is known as the bargain purchase. Investors who use the bargain purchase method when choosing a property pay twenty percent less than market value for the property. 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. The last strategy is the double digit cap rate which is the one many real estate investors use. The double digit cap rate strategy is used for buildings that have a capitalization rate of ten percent or more. Dividing the net operating income of the property by the purchase price gives you the capitalization rate. You can profit big with these things if the market is depressed or you are looking into small market niches. It is always wise to have a real estate agent on your side to help you make the right decisions, tell you of any new listings and include some foreclosures you may be interested in no matter what kind of investment strategy you want to use..

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