We all know the term “flipping houses”. There’s plenty of shows on HGTV with flipping as the theme. Some of these shows make it look pretty easy, some show a harrowing experience. More often than not the show hosts end up flipping their property for a profit no matter how the experience is portrayed. That’s not always the reality though. Over the next few weeks we will be leaking some insider tips on investment properties here on the blog, so stay tuned for more.
Many people just starting out in investment properties make a lot of mistakes the first time around. They may buy a home that’s just a bit too expensive for a profitable investment. Sometimes you get the bargain deal, but it has more work than you thought there would be. Sometimes you may buy and flip and the house sit on the market for too long for any number of reasons.
The easiest way to avoid a lot of these pitfalls is to get the right property at the right price. This may sound simple enough, but real estate is all about pricing.
Know Your Spread
How much money do you need to maintain a profit on the home? Remember while you fix it up and have it on the market rather to rent or to buy you’ll be paying mortgage, taxes, and utilities. Not to mention the cost of repairs and upgrades you plan on making. Be sure to factor these figures in when you’re looking at prices. You need to have an idea how much your investment actually will be, not just the listing price of the house. Then compare this to what you will be selling or renting the house for.
Stay inside your budget to the best of your abilities. Try to estimate the cost of repairs and upgrades before purchasing a home. You may find a great bargain house then spend tens of thousands of dollars repairing the home. Buying a house that needs to be completely leveled may not the best way to invest your money even if it was really inexpensive to buy. Learn more about understanding your cash flow by following this blog.
Be Patient, But Act Quickly
Once you know your spread you’ll know what kind of home you’re looking for. Be patient. It may take some time to find the right place that fits your needs and budget. Don’t give up hope, it’ll come. Keep an eye on foreclosures and auctions.
That being said, when you do find a great bargain with just the right amount of improvements needed JUMP ON IT! Move quickly to make an offer. Don’t be afraid to get a bit aggressive as long as your wallet allows. Good deals won’t stay on the market long. You’re not the only shark in these waters.
Know your Community
We’ll be covering more about neighborhoods and communities here over the next few days in more depth, but the neighborhood you choose to buy from is a part of knowing which properties are right for you.
You want to understand the market of the community you’re expecting to buy in. Have property values increased every year? how long do most properties sit on the market? What are the comparable prices of the homes around the property you;re interested in?
At the end of the day this is all about profit. Which area will increase in value and expand your profit? This is where having a Realtor on your side can be a real advantage.
For more Investment Tips follow our blog the next few weeks!