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Strategy for Profitable Real Estate Investing
Are you interested in the lucrative
real estate market? Have you watched the Do-It-Yourselfers
on TV who purchase a home, renovate or upgrade, then
resell it for a profit of more money than most people
make in a year?
It sure is tempting, but what are the
pitfalls? What should a new investor know BEFORE putting
money into real estate?
There is one mantra that successful
real estate investors live by: "buy low - sell
high". How can you apply this to your investment
strategy?
DON'T GET OVERSOLD
New investors can easily get caught
up in the sale. Without experience or a background in
real estate you may think your instincts are good and
quickly get in over your head.
Investment properties need to be undervalued
and YOU need to do your research first. Don't plan to
buy without spending a lot of time comparing values.
Your goal is to purchase an undervalued property which
can take time and experience to spot.
The best way to determine the true value
of a property is by comparing similar properties and
noting the common features. The properties MUST be in
the same area since location can drastically affect
price range.
Take note of the features and failings
of each property, how long they're on the market and
the price they sell for. Once you have a good understanding
of the value of properties you will be able to tell
when a property is undervalued - perhaps because a quick
sale is needed or the seller is inexperienced. Don't
hesitate to barter for the best deal possible.
KNOW YOUR MARKET
You're not buying for yourself so spend
time noting the trends in the market. You can often
find data in the local real estate papers listing the
percentage of growth for various properties in the area
over the past year.
Keep an eye on what's moving quickly
through the market and what features are promoted in
new constructions. You can use this information to make
your upgrades as market friendly as possible.
Be careful not to make the mistake of
renovating to your personal tastes. Use neutral palettes
and current styles to appeal to the broadest market.
KNOW YOUR BUDGET
The more time you spend researching
the costs of your venture, the higher the profits you
will see. Know how much you can spend, the price of
materials and labor and the time frame to have it completed.
Some experts would tell you to double or triple that
amount. In any case, the more research you do the more
accurate your budget will be.
Don't get swept away in the process
either; concentrate on the most profitable renovations.
Kitchens and bathrooms are important. Adding French
doors or updated lighting can also be a good investment.
A fresh coat of paint is a must.
Investing in real estate is a financial
business. Plan your investment like a business; make
well researched decisions, stick to a budget, don't
let personal preferences get involved, and you're ready
to make some money!
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