First of all a property search is conducted since the complete know how of the market is very important. They should evaluate their financial strength and check the market for property for sale accordingly. All home work should be done before entering into a deal. It is critical to know the right time and place to apply a particular method.

The main methods of investment in properties are direct and indirect investments. Direct investment is when property is bought and is sub let. But when one makes a direct investment he should be aware of the risks involved and should beware of the quick get rich schemes. As for the indirect investments, the investors invest in pooled or collective investment schemes. Some of these schemes are regulated hence forth decreasing the risk of financial losses.

There is the method of investing in distressed property. Distressed property is available below the market rate. The buyer should be able to evaluate the repair costs and check if it’s a deal worth entering into.

Then there is the method of buying land and building on it. Land can be bought and homes can be made on it in phases and sold or rented accordingly. It is very profitable investment if the buyer/investor has time and money to invest. Apart from this a modern manufactured home can also be made on the land and then sold. Though it’s not as profitable but is less time consuming. But it should be kept in mind if that specific area has a market for such homes.

Buying pre-foreclosure and post-foreclosure properties is a popular investment method. The pre-foreclosure properties are the properties where the foreclosure process is in its initial stages. The owners are still in default on their mortgages. And the post-foreclosure properties are the properties where the foreclosure process is complete and they are available I the market by the lending institutions like the banks or other financial institutions.

Property can also be bought and held. Be it land or a home you can hold it for a while till its market price rises. But all the other holding costs like the maintenance and the taxes should be considered. This method although seems to be very easy and it is, but it’s very limited in scope.

Apart from this property can also be held and flipped. This way one does not have to hold the property for long and does not have to bear the holding expenses. But this method can have several shortcomings for small scale investors.

Investments can be made on small houses and apartments. The buyer can buy the property and if he finds the rental properties feasible, he can rent it and use the monthly rent to hire professionals to take care of the house and to maintain it. All the while the value of the property will be on the rise.

If desired, investment can also be made in portions of the property instead of the whole property. There are two methods as far as investing in portions instead of the whole parcel is concerned. One method is that where an investment can be made to a certain percentage of the property and it can be retained and then resold at an adjusted rate according to the forces of demand and supply in the market. In the second method the investors can extend a loan to the prospective buyers in exchange for a specific rate of interest that has been decided amongst the prospective buyer and the investor. This method would allow the investors to own a share of the property and then instead of waiting for the market price of the property to rise and then sell the property the investors can sell the property back to the buyers gradually and slowly.

It is even more appropriate to make an investment in second homes. Like a small house, cabin, a condo or a vacation home. Vacation homes sound like a great idea but can often be expensive. But it is possible to buy a vacation home and rent it for part of the year and let the property pay for itself. After the price has been paid over the period of time in the end you are left with a second home.

Property renovation is another method of property investment. The property can be bought and renovated according to ones desires and sub let or sold for a better price that would not only cover the cost of the renovation and the property itself but would give a substantial profit.

The investors can invest alone or in partnership with the other investors. They can invest directly or passively. Direct investment requires the active participation of the investors whereas there is passive investment where the investor need not be involved in the management of the real estate. There are basically two methods of making passive investments. They are as follows.

1. Limited Partnership
2. Investment Trusts

A limited partnership is a business entity that is managed and run by general partners who sell their shares to limited partners to buy real estate properties. A limited partnership is ideal for people who do not have the time to manage their investments alone. But if losses are incurred then the passive investors can not compensate their losses, except with other passive incomes. But great care should be taken before blindly entering into a limited partnership with other people. Their history and past records should be thoroughly researched.

There is also the method of co-ownership. In the co-ownership investments the investors are congregated by a promoter to invest in a property. The promoter and the company that the promoter belongs to, both invest in the scheme along with the investors. The company functions on a daily basis and overlooks the establishment of the scheme.