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Several strategies of real estate investment

As many Maryland entrepreneurs know, there are several benefits to investing in real estate and different ways property can be purchased. Real estate investors achieve success by employing various strategies in the process, including obtaining financing.

One strategy real estate investors use to buy property is through wholesaling investor purchase-to-sale. As a short term funding option, this strategy is much like flipping houses in that the real estate investor buys the property, pays for the closing and then, on the day of closing, pays the loan off. Then, the investor will assign the contract to another buyer or investor who will then be responsible for paying off the debt.

Another strategy that many proactive real estate investors use is a long-term rental mortgage. This type of funding generally comes from traditional lenders; therefore, passive investors commonly do not use this funding method.

There is also the fix and flip investment strategy. While this requires short term financing, the investor will have to seek more money for the property's improvements and repairs. Although transactional lending is a funding option, it is expensive. Thus, many real estate investors turn to a passive, private lender who is willing to loan them the money they need. These lenders may require high returns over a short time frame with little risk.

Investing in commercial or residential real estate is often a lengthy process that entails many complicated details. In many cases, unexpected circumstances pop up along the process such as zoning complications, financial difficulties and contract disputes. Real estate investors and sellers who confront such difficulties in property transactions might consider consulting a local real estate law attorney who can offer advice when it comes to selling, purchasing and financing commercial or residential real estate.

Source: The Huffington Post, "Skipping the Middle People in Real Estate Investing", Scott Yancey, May 25, 2016

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