Investing In Mississippi Real Estate

In this article on real estate investing, I am going to discuss a subject that can be very complex in the simplest manner possible. Later, I will delve into the specific areas of real estate investment, but for now we’ll keep it basic. You certainly don’t have to be Donald Trump or T. Boone Pickens to begin building your first real estate investment portfolio.

The age old real estate expression. “location, location, location,” has some truth to it, because location is one of the most important factors when buying real estate, if not the most. When investing in a property, it is essential that it is in an area that is growing or maintaining stable property values. You certainly wouldn’t want to pay too much for a home or business, would you? Well, if you buy in an area in which real estate prices are decreasing, it won’t take long for your investment to lose value and essentially it is the same as if you did pay too much from the start. A realtor will be able to assist you in ensuring that you are paying the appropriate amount for the property, by providing a comparative market analysis. Furthermore, your strategy will be a key factor in determining what type of properties you wish to add to your portfolio. Whether you are buying to "flip," lease, or develop, ensuring that you are paying the appropriate price is essential.

There are several types of real estate investors, but all of the savvy ones share one common denominator and that is self-discipline. It is essential to thoroughly analyze your project before beginning and not rush into it without intense research. The first of the investors is the property “flipper,” as featured on every real estate reality TV show. These individuals will buy derelict properties and transform them into totally updated works of art. They do this by acquiring these homes at a fraction of the “ARV” or after repair value. They must accurately estimate the cost of all remodeling and repair work and acquire their target property at a low enough price to sell it for a profit after those repairs and updates are completed. This form of investing can be quite risky, but as with all risk there can be an excellent reward if the investor proves to have solid self-discipline, accurate estimates, and a knowledgeable realtor.

Another type of investor is the portfolio builder. Generally, these individuals are more interested in investing for the long-term and acquiring residual income. They acquire residential and commercial properties and lease them out. They will buy a property and acquire 20% equity (or however much is necessary), then use that equity to gradually acquire more properties. All the while generating an income from the portfolio properties through leases and either taking profit off the top or having them pay for themselves. This method can create a large amount of residual income, especially after the properties are paid off “free and clear.” For example, Trump owns five properties which pay him $1000 a month. That’s $60,000 a year which can be used to pay off or buy more properties for him to become “REALLY REALLY RICH.” Moreover, this method also has a level of risk involved, as with any investment. The properties must stay leased or the owner will lose money, especially if he is still paying down the note or mortgage. Maintenance, depreciation, taxes, and bad tenants are also factors that need to be considered with this method.

Finally, there is the developer. These investors build speculative houses and commercial properties on raw land. They will acquire the land and build the property to either sell, lease, or use for some other purpose. Generally, this is done to sell for residential and lease for commercial. This particular form of investment requires the highest level of skill, research, and knowledge. If done correctly, it may also have the greatest gains, but also the highest level of risk. These types of investments will also require the highest upfront cost. These individuals will defer risk by working with a team of highly qualified professionals from acquiring the land to leasing or selling the property. Development ranges from small scale speculative houses to large multi-million dollar commercial projects.

For more information on or to begin investing in Mississippi real estate contact Sterling McCool with The Overby Company at (601)624-3227 or sterlingmccool@gmail.com