You may have noticed that in recent years, foreclosures seem to have skyrocketed, and as a result, a number of homes have popped up available for purchase well below market value. Though many will call the current market a buyer’s market, you really can’t afford to lose as an investor! There are buyers out there still with money, and though a good portion of homeowners no longer have a sterling credit score, there is still some money to be made if you play your cards right.
Before you jump into your first investment you’ll want to make sure to spend time in a good real estate training course that will teach you what you need to succeed. You can also read a lot about investing in real estate for free at Dean Graziosi’s Facebook page. Dean gives away a lot of incredible information on how to succeed.
Two Ways To Make Money
Generally, when you consider making money in real estate, there are two ways you can do so. As a first option, you can purchase housing units for cheap and rent them out to local tenants that you have personally selected. As a second choice, you can buy up properties for a low asking price and resell them for a higher profit. The option you choose will more than likely depend on the type of property and the condition that it’s in currently.
A lot of areas are actually seeing an increase in population, and you will need to consider that at the end of the day, there is a finite amount of land available for development.
Rarely will you see new communities popping up in the future, so when you invest in any given area, you’re actually doing the right thing. Maybe not today, but in the near future, the price of any property is likely to increase at a rate which can yield you a nice profit.
There is Risk Involved
We won’t lie– making money in real estate involves taking a leap of faith and assessing risks. However, when you think about the longevity of your investment, the real estate market is the only one worth investing in. Bonds and the stock market are unsafe, and the same thing can be said for gold. What if the prices drop dramatically and you can’t turn a profit?
Fortunately, the real estate market is never quite as drastic if you know how to invest. The key to success is purchasing properties at an asking price below market value and turning around and selling it for full asking price. However, you have to keep in mind that not every property is going to be a good investment, so knowing how to weed out the so-called lemons will ensure you stay afloat.
Hold and Sell Timing is Critical
Additionally, you will need to learn when to hold and when to sell your investment. In cases when you can’t get a good price for your property, you can hold onto it and rent it out while waiting for the market to bounce back. However, if the demand for the neighborhood is high enough, you can make the necessary fixes to increase value and resell soon after acquiring the property.
Fixer-uppers are generally the most common type of property investors use when making money in real estate. These houses will need to be completely rehabilitated if you want them to be sold for a reasonable profit. The problem with investing in properties that need a fix is that you never really know how much the repair costs will add up to. Every investor knows that such properties can become money pits if you’re not careful.
Foreclosures are a Good Option
Another option is to purchase homes that have been seized and foreclosed on. In most cases, you can get these properties way below market price, but as a bonus they are often high end properties in desirable neighborhoods where little effort is necessary to get them sold. Investing is always a good idea, but you do need to stay smart.