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For most people, "investing in real estate" means first buying
a property - house, apartment, condo, vacation home - and then either renting
or leasing it, or reselling it for (hopefully) a profit. In all these cases,
of course, what we're talking about is improved land - real estate that has
already been developed.
"Developed" Usually
Isn't Developed Enough.
The problem is, becoming a property owner is a lot more complicated
than becoming a land owner. Unless your investment is in a newly-built
property, you'll have a good bit of improving to do to your "improved" property
before you can put it back on the market for rent, lease, or sale.
So You Want To Be A Landlord...
Here's where things start to get complicated. Whether you're doing
a "rehab", and getting a property in shape to sell, or fixing
up a property for rental, you're entering an area so involved that
there are countless real estate courses offered just to show you how to do
it correctly - and legally.
Lead Paint? Mold? What Happened To Real Estate?
The list of things a property owner has to worry about never seems
to stop growing. In the last few years, localities all over the country
are making it harder and harder for both landlords and property sellers
to comply with lead paint issues. And next on the horizon is mold.
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Getting all the certificates you'll need before you can move forward can
be difficult - and expensive.
Contractors, Tenants, Buyers...Oh, My!
Unless your brother-in-law's one of the guys from "This Old House",
you'll likely need to hire a contractor (or several!) to rehab your property.
And, you'll need one that shows up on time, stays on schedule, stays within
your budget, and follows your plan. Next, you'll need to find a tenant
who'll pay on time (including the utilities), and not cut out on his
lease early and leave you to track him down, take him to court, or absorb
the loss yourself. If you plan to sell outright, you still have to find a
buyer who can meet your price, secure a mortgage, etc.
LandBanking - Real Estate the Easy Way
Since LandBanking involves only unimproved land, it can be a hassle-free
way to invest in real estate. LandBanking is a passive investment -- no
driving around for weeks looking for a good rental or rehab property -
no contractors, tenants, or buyers to track down. And, no landlord worries
- no insurance premiums coming due, no damp basements or leaky roofs.
Is LandBanking The Only Option For Passive Real Estate Investing?
One popular choice for investors who want to pursue the potential profits
of real estate without the complexities of building ownership is the
Real Estate Investment Trust. We'll cover that topic next.
NEXT: LandBanking vs. REITs
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