Which Investment Products Are Investors Buying?
Investors are people who invest funds into projects, real property, or cash flow notes to generate profits. A variety of investment products exist, but the most common include real estate, small businesses, corporations, stocks, bonds, mutual funds, land contracts, and real estate notes.
Investors should take time to conduct research about each type of product before investing money. While some investors strike it rich through beginner’s luck, it is best to develop a strategic investment plan to minimize risks and increase profits.
The banking crisis and real estate market collapse financially crippled many investors. The financial fallout continues for many real estate investors who are holding multiple properties they cannot sell or rent.
Other investors are capitalizing on the poor economy by purchasing foreclosure, bank owned, and short sale properties. They understand the need for quality rental homes based on the number of people losing their homes to foreclosure.
In addition to an expanding need for rental properties, some investors are offering ‘owner will carry’ financing as a way to help foreclosed homeowners buy a house, while generating positive cash flow through investment properties.
Real estate investors can be a saving grace for homeowners who have obtained short sale approval. When mortgage lenders enter into this type of contract they allow mortgagors the opportunity to sell their house to avoid foreclosure. In exchange for a quick sale, banks agree to accept less than the full balance owed on the mortgage loan.
Short sale properties are normally sold below market value. However, the process involved to acquire these homes can extend for several months. This can be limiting to investors because they cannot proceed with repairs to rent or sell the home. Investors should carefully determine the true cost of buying short sale homes.
Cash flow notes can be a good investment product as long as due diligence is conducted. Cash flow notes encompass a variety of notes including mortgage notes, seller carry back mortgages, land contracts, structured settlements, and business notes.
Investors must determine if buying these types of notes is allowed within their state of residence. Many states prohibit the sale or transfer of structured settlement annuity payments, but most other cash flow investment products are allowed in all states.
Investing in businesses can include providing seed money, acting as an angel investor, or purchasing company stock. This type of investment strategy can be risky, especially when investing funds into a startup company. Investors should carefully review business and marketing plans or company prospectus to determine if this is a smart financial choice.
Investing is still a good way to put your money to work for you, as long as appropriate research is performed. It is best to consult with a reputable investment group to review available products. Another good source for comparing products and learning about new investment opportunities is other investors.