#1 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!