Real estate is, let’s be honest, one of the only investments you can trust anymore. Sure, there are always ups and downs. A house you spend so much money on today might be worth half as much a year from now, but, it will eventually improve in value, and it will ALWAYS be worth something. That said, you still want to know how to make the most of your investment. Here are some of the basics when it comes to turning a home into a profit.
Buy Property Cheap
This one is obvious, but people often neglect this step, if you can believe it! A good example would be when Mel Gibson famously bought a mansion at the top of the market, and when he sold it a few years later, he barely made a five percent profit. This is not how money is made in real estate. The people who really make a mint doing this will buy up low income housing, they’ll buy beat up, worn down, torn up old houses, and then convert those homes and properties into something worth buying. You can’t turn much of a profit by buying at the top of the market. You have to see UNFULFILLED potential to really succeed in this field.
Sell it High
Another step that should be obvious, but which many people completely ignore! You can’t buy a crummy house and sell a crummy house and expect to make money. Look, if all you want is a fast buck, try the lottery. Flipping homes is all about taking something of very little value and turning it into something of very high value. You know what they say, location is everything, right? Well think of it this way: Location is IMPROVED by the value of the homes within that location. If you buy a crummy house in a mid-level neighborhood and turn it into a real winner, you’re improving the local area value and thus your final sale price.
Control Your Repair Budget
One of the biggest pitfalls for new home investors: They spend so much fixing the place up, they find it hard to make a profit. When you’re making your first million, you can go ahead and buy and sell bigger ticket properties and live in a penthouse. Until then, live in the first house you flip, fix it up yourself and with friends (preferably friends who will either cut you a good deal, or work for a small but fair percentage of the the final profit), and only bring in professionals when absolutely necessary. You can fix a beat up old place up with less money than you’d spend on a used car, but a few month’s of work and a very small repair budget can more than double the final sale price.
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