Investing in real estate is a good way of earning returns on hard earned money. Buying homes at auctions and flipping them after a few months or collecting rents for years is one of the most common ways of profiting in the real estate market. However, there are some rules that people should follow to make sure they will not lose money, and instead acquire profits faster.
Buying homes at real estate auctions is a good idea, as the prices are much lower than those of real estate agencies. Still most companies, in particular those that deal with foreclosure, require fast, cash payment. Securing finance before submitting a bid on the home is important, as there is a time limit on completing the sale. Further, buyers also need to have a solid knowledge of the area where the house is located along with the construction details. Not all auction listings have photos and the return on investment will depend on how much the new owner needs to spend on the house.
When people buy and hold real estate, they often plan ahead to create a portfolio that provides them with long term profits. Some people prefer renovating the homes they buy themselves and selling them for profit in a few months’ time. In order to maximize earnings on the real estate market, the money will need to be re-invested over and over again. A simple turn in the housing market, like the one in 2007 however, can wipe out all profits. This is why many people choose to buy properties they can rent out later.
The demand for rented accommodation is not dependent on house prices and having two or three houses will not require a lot of time. Many people who are close to retirement decide to buy homes and invest in real estate in popular areas. Based on the average rental value of 300-500 dollars a year, they can make thousands of dollars each month and can sell the house when the prices go up. This is a safe way of making an investment in homes without the risk of losing money.
Before buying the property, it is important to check whether or not there are any planned developments in the area and which modifications need a permission. Renovating the kitchen or putting in a new bathroom normally would not need planning permission, but knowing how much the whole project will cost is extremely important for potential profits in the future.
Overall, before you dive into this opportunity, be sure to find yourself a real estate mentor that you can bounce ideas and questions off of. You will find this to be one of your most priceless assets while pursuing this time of investment.
Freedom Mentor is one of the real estate mentors I recommend to those just starting out in the real estate investment arena.