When it comes to finances, everyone has the same question: how can I put my money to work for me? If you’ve saved up or come into a bit of cash, it’s a good idea to research where you can put it to generate passive income.
Bank accounts are one place to stash your cash for safekeeping, but the yields on savings accounts are never particularly high. Typically, you’ll make less than 1% interest each year. Low-yield bonds are another safe bet, but they have similar slow growth. Some investors opt for high-yield bonds, but they must deal with the high risk of losing their investment due to default.
The stock market is another popular investment option. Making smart stock investments depends on one of two things, however: either you must turn your money over to someone else to manage – someone who is knowledgeable about the safest place to put it – or you must become a stock expert yourself. The second option requires quite a bit of study, trial, and error, as you have to learn the ins and outs of the market, as well as research the various stocks, company earnings, and what’s going on in the headlines that may impact their value. The stock market offers the opportunity for slow-but-steady growth or skyrocketing earnings, but the latter requires a willingness to engage in a white-knuckle roller coaster ride of volatility.
Real Estate as an Option
To earn decent returns while escaping the ups and downs of the real estate market, many investors have turned to the real estate market. While real estate can have its bubbles, on the whole, it’s quite reliable for investors who do their homework. Forbes reports that while the expected average return for investing in stocks and bonds is 2%, home investors can earn as much as low double-digit return percentage if they invest right.
In addition to returns, many people choose to invest in real estate because it keeps pace with rising inflation rates. The tax advantages of owning real estate also helps make them an incredibly attractive investment. This is especially the case if you plan to rent the property out, as the newly updated tax code in the U.S. allows a 20% deduction for all pass-through organizations.
One of the most important reasons people choose real estate as an investment strategy is because it gives them control over their money. There’s an appeal in purchasing a rundown property, updating it, and selling it for a greater value. Many homeowners also opt to buy investment properties and rent them out, earning passive rental income even as the property appreciates over time.
While it does take research and digging to understand the real estate market in a particular area, property investment offers the opportunity to purchase in up-and-coming areas that are likely to flourish and become more valuable over time. With the proper homework and insight, it also allows investors to find deals on foreclosed properties that offer very attractive returns on resale.
Buying Real Estate at Auction
One of the best ways to get deals on investment property is to buy them at a real estate auction. Properties end up at auction for various reasons. In some cases, they’re foreclosures. In other cases, the original homeowner may have owed unpaid back taxes and the government is selling the property off to collect that money.
Whatever the reason for the sale, real estate auctions offer an attractive opportunity for investors to acquire properties at a fraction of the price they’d pay in a typical sale. Home auctions used to only be open to professional real estate investors and brokers, but now they’re open to everyone.
What’s the best way to find auctioned properties? Newspaper advertisements are helpful, while local auction houses are another source of information. Searching online is your best one-stop-shop to see what’s coming available, with sites such as Hudson & Marshall – Real Estate Auctions displaying a searchable database of properties, photos, and additional information necessary to help you choose what you should bid on.
Straightforward and Simple
Online real estate auction websites have completely changed the face of property auctions. In the past, investors (or their broker/representative) had to show up in person wherever the auction was being held in order to place a bid. Sites like Hudson & Marshall streamline the process, allowing buyers to search for potential properties as well as bid for them online. Because Hudson & Marshall has been operating for over 50 years, they’re reputable and a favorite of real estate professionals. They auction lender-owned residential and commercial properties, lender-approved short sales, pre-market properties, as well as conduct land auctions.
Investors like purchasing property in this manner because the process is incredibly straightforward. Unlike traditional real estate sales where the property may be put on the market at one price and sit there for months before being reduced, the sellers for auctioned properties are motivated to sell as quickly as possible. Auctions also make it impossible for sellers or agents to play one buyer against another in a “We have another person about to place an offer at listing price” game. At an auction, everyone is in to bid, the process is over quickly, and the highest bidder wins the property with no games played.
Things to Know About Buying at a Real Estate Auction
For newbies to the world of real estate auctions, there are two factors to know. The first is that homes are sold as-is and can sometimes need repairs and maintenance to get them back into tip-top shape. This can especially be the case for properties that are being sold because the original owner ran into financial difficulties. Buyers often aren’t allowed to tour the homes before the purchase.
The second thing to know is that if you’re ready to bid, you also have to have cash in hand or some form of financing lined up and ready to go. Be prepared to pay the price of the property, any associated closing costs, and the fees for the auction. Closing typically happens within 30 to 45 days.
Real estate auctions are a wonderful way to bring together motivated sellers and savvy buyers who are ready to make a deal. If you’re hoping to make a nice return on your real estate investment, they’re definitely a strategy worth considering.