Investing in Real Estate.
Investing in Real Estate.
Riches can be made in any kind of real estate market. A
professional real estate investor makes money when prices are
high and when prices are low.
No matter what is happening in the market they buy low and sell
high. They never buy high and expect to make money waiting for
prices to rise.
Newbies buy high expecting prices to rise, and when the prices
drop they are left owing $175,000 on a house that is now worth
$100,000. So as a real estate investor always buy low.
Everywhere there are properties selling for below market value.
There are many homes in average neighborhoods that need a few
thousand dollars worth of cosmetics.
For example, take a house selling for $100,000. Since you have
done your homework you know it could easily sell for $145,000 or
more if it looked better. Buy the house, spend $2,000-$7,000
fixing it up, and sell it for a sizable profit.
Never spend a pile of money to completely renovate a house. Just
do cosmetic changes such as painting the inside and outside,
putting in new carpet, fixing broken doors and repairing leaky
faucets. Only do the basics to make the house presentable.
Real estate investors recommend you start out buying
three-bedroom, two-bathroom homes. These are the most in demand
and so are the easiest to re-sell.
Buy in neighborhoods that are nice. You do not want to buy in
neighborhoods that are too nice or too rough. Focus on your
average family-friendly neighborhood.
Also, buy homes that are listed at 60-75% or less of their
value. Never buy a home that is listed at $100,000 with a value
of $100,000. Buy the one listed at $75,000 that is valued at
$100,000.
The easiest way to find these homes is to work with a real
estate agent. Find one who will be glad to find you homes that
meet your criteria.
Why work with a real estate agent? Agents have 85-90% of the
properties for sale. They know the area. Tell them you are an
investor right up front and what you are looking for. The great
agents will be happy to send you all the homes you can handle,
and you will be happy to pay them their commission.
Besides having a great agent you also need to have a niche
market. Are you going to focus on foreclosures? Are you going to
go after fixer-uppers? Are you going to buy and then quickly
re-sell? Or are you going to buy and rent it out for a while?
If you are going to rent out your properties be sure you do the
math. Will you be able to rent out the house for more than the
monthly expenses? Be sure to include a property manager with
those expenses. And remember that the house might sit vacant a
month or two. Allow enough money to account for no income for
part of the year.
So never buy a home that is going to cost you $1,000 a month in
finance charges and other expenses if you can only rent it out
for $800. That is a fast way to end bankrupt.
But before you do all this, before you get a real estate agent
and go out making offers, there is one very important thing you
must do first. You must write down your goals.
Is your goal to be worth $1 million within five years? That is
very possible. But do not expect to reach 1/5 of that goal in
the first year.
Start with a plan to make so many offers a week and stick with
it, increasing it as you go. Since most beginners make one
purchase for every 50 offers, have a plan to make one purchase a
month. That would require you make 50 offers every month. Set
the goal and little by little you will achieve it.
So you have your goals, you have a great real estate agent, you
know your niche, and now it's time to make some offers. As
stated, most beginners make one purchase with every 50 offers.
If you make $25,000 on that one purchase, then in effect you are
making $500 each time you make an offer. So never think that you
are wasting your time making those other 49 offers.
Just as important as having written goals, a great agent and a
niche, you need to have the right frame of mind to deal with
success. So many who want to invest in real estate actually
cause themselves to fail. They self-sabotage their success.
Believe you can succeed. Learn how to handle money wisely.
Educate yourself by reading and attending seminars. Surround
yourself with people who have the same goals as you and who are
achieving their goals.
There are many real estate experts out there, so find a good
one, attend the seminars on learning how to think about money
and be financially responsible, and begin your journey to buy
and sell properties.