Weigh Risks of Investing in Houses

(November 17) -- There are a number of ways to invest in real estate. The method you choose should reflect your tolerance for risk and quick rewards.

Those who can purchase foreclosed properties at a discount, for instance, can generate substantial profits if the rental income exceeds the mortgage payment. However, such homes typically are sold as is; and buyers actually stand to lose money if major repairs are necessary. Fixer-uppers also are a good bet, but prospective buyers might want to look elsewhere if they are not sure they can earn enough money on the investment to cover the improvements and any surprise repairs. Though prospective investors should always keep their eyes peeled for quality homes in prime rental areas, this type of search could take quite awhile because such deals are scarce in some markets.

Yet another option is to consider purchasing mortgage notes, but investors could lose most of their investments if the borrowers foreclose on the property.

Source: Washington Times (11/14/03); Carr, M. Anthony