Real estate investing is not something you should undertake without a carefully considered strategy. There are innumerable details that must be attended to that will ensure that your investment is legal, secure and ultimately profitable. Here are the basics for developing a good real estate investing strategy:

Understand the Particulars

The typical real estate mortgage underwritten by banks on single family homes is so simple that it is all but unheard of for anything but a “boiler plate” contract to be used. More complicated deals involving commercial properties are not so simple. Be sure that you have the details explained to you by you own lawyer or some other disinterested party. Discovering an unusual clause at an inopportune time can wreak havoc on you mentally as well as financially.

Protect Your Investment 

In addition to observing all the legal niceties with a contract, a real estate investor should also protect his investment as part of his investment strategy. First, the property should be inspected and appraised before the loan is made so that there are no unforeseen problems later. Secondly, the loan amount should only be a portion of the total value of the property – typically 60-75%. Structuring the investment deal so that these two criteria are met will all but assure that the property can be liquidated in case of a loan default and the entire investment recouped in a relatively short period of time.

Stay Involved

The idea, indeed the beauty, of passive real estate investing is to avoid dealing with the day to day activities associated with running a property. Still, this does not mean that you should completely ignore your investment once the loan is made. While your only real interest is in whether the loan is paid on time and in full, it does not hurt to maintain an appropriate interest in the property so that there are no unwelcome surprises.

Utilize Experts

Implementing a good real estate investing strategy can seem like a daunting process to the uninitiated. Utilizing the services of experts like appraisers, inspectors and private money lenders can significantly simplify the process. Consider them before proceeding on your own. In particular, private money lenders have the resources, expertise and experience to find and help consummate the most complicated of deals. In addition, they are experts at bringing borrowers and lenders together.