Real estate investing can provide substantial profits, but is often too costly an undertaking for an individual. This is where money clubs solve the problem that many individual investors have by providing enough capital to make an investment acquisition possible. Homes and real estate can cost hundreds of thousands of dollars. However, if the right property or home can be found, a large profit can be made. Many properties are fixer-uppers and it is possible that the club members could even pitch in some labor hours if the property that is invested is in the local area. The number one rule of real estate investing is to buy low and sell high. It sounds simple, but the trick is in knowing where to find the right deals.

Finding the Deal

In order to find someone who is selling a property for under its value it is important to ask the following questions: What type of person would want to sell a property for less than its worth? What will the property need in maintenance or repairs before resale? Where can I find these people?

The Answers

The answers to most of these questions can be found by looking for people that are in distress. People who are months behind on housing payments and are in debt are often good candidates to approach about buying their home or property.

The local newspaper is a good place to start, as is the local courthouse. Both of these resources will have information about homes or properties that are soon to be foreclosed, or put up for auction. Once a target is found, do not send letters or try to email them because it is likely they are getting many other letters from people exactly the same thing, trying to buy their property and turn a profit. The best solution is to actually go and knock on the door. A face to face conversation will provide more information than mail correspondence and will get an investor’s foot in the door easier.

Contract

The next step is to get the property under contract and to begin finding an actual buyer for the home. In this way, an investor can act as the real estate agent. The contract should stipulate that no other buyer can purchase the property for a set amount of time. The holder of the contract is given this time frame in which to either close the sale or to let the contract run out and not purchase the property. If a buyer can be found during which the contract is held by the investor, they can then buy the property and then sell the property and resell for a profit. Should the investor not find a buyer, the contract will simply run out with no cost to the investor. The legalities regarding this process are complex and do not always work the same for each situation and even vary from state to state. Therefore, it is important that real estate investment clubs obtain sound legal advice on all matters regarding the actual contract, sale, and resale of all property investments.