Most investors employ real estate agents and real estate attorneys to assist with the acquisition process, as it can be quite complex, and improperly executed transactions can be very costly.
Once an investment property has been located, and preliminary due diligence (investigation and verification of the condition and status of the property) completed, the investor will have to negotiate a sale price and sale terms with the seller, then execute a contract for sale.
Real estate wholesalers and investors (" flipping").Private sales (transactions for sale by owner).Public auction ( foreclosure sales, estate sales, etc.).
Government entities (such as Fannie Mae, Freddie Mac and other government agencies).Banks (such as bank real estate owned departments for REO's and short sales).Real estate agents and real estate brokers.Market listings (through a multiple listing service or Commercial Information Exchange).Typical sources of investment properties include: Real estate entrepreneurs typically use a variety of appraisal techniques to determine the value of properties prior to purchase. This increases transactional risk, but also provides many opportunities for investors to obtain properties at bargain prices. Information asymmetries are commonplace in real estate markets. For this reason, locating properties in which to invest can involve substantial work, and competition among investors to purchase individual properties may be highly variable depending on the knowledge of availability. Individual properties are unique to themselves and not directly interchangeable, which presents a major challenge to an investor seeking to evaluate prices and investment opportunities. Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. ( March 2015) ( Learn how and when to remove this template message) Unsourced material may be challenged and removed. Please help improve this section by adding citations to reliable sources. Typically, investors choose real estate for several reasons: cash flow, capital appreciation, depreciation, tax benefits and leverage. A passive investor might hire a real estate firm to find and manage an investment property for them. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. If these factors are not well understood and managed by the investor, real estate becomes a risky investment.
It is also capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent. Real estate is an asset form with limited liquidity relative to other investments (such as stocks or bonds that openly trade on financial markets). Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development. Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. ( Learn how and when to remove this template message)