Turning for Profit in Any Economy
In many ways, you could view long-term real estate investing as an easy win. After all, you buy the property and then maintain it until it has a lot of equity. Then, you sell it. Since you held onto it for 10 or 20 years, the odds of it having appreciated are huge, so you probably will make a sizeable chunk of change when you sell it.
However, in short term real estate investing, everything happens faster. You do not have time to wait for the property to appreciate; you just have to focus on getting as much as possible for it in the current market. These days, that can sound pretty intimidating, but not if you follow some simple rules for turning in any economy.
First, you need to do some market analysis in the area that you are thinking of buying. In most markets properties are moving. However, this does not mean that the property that you are interested in is the type that will move. For example, in many areas three-bedroom, 2-bathroom homes are selling fairly swiftly and are even in demand. However, go to higher numbers or lower numbers of bedrooms and bathrooms, and all of a sudden you have a house that is just going to sit there.
The best thing to do is work with local investors or local real estate agents to determine not only if properties are selling in the area in which you are interested, but also the property type that is selling. Once you know what type of property you are looking for, the time has come to get a really good deal. In the past, I have worked with many students who felt like if they could buy a house for 5,000 dollars under market value, and then they should be able to sell that house for 4,000 dollars under market value and still make 1,000 dollars.
In principle, this sounds like a great idea. But the fact of the matter is that it just plain does not work. Particularly in this economy and market, everyone is looking for a deal. So you need to work with your local contact to determine what you can realistically expect to get from a property, and then buy one that you can afford to sell for even less than that number. In this way, you outsell the competition; still while turning a profit and turning that house over fast.
Finally, you need to investigate selling options. A few ways to make a property more attractive are to offer owner-financing, subject-to transactions or lease-options. All of these make your property more attractive than someone who will only sell the house if you have cash or money from a traditional lender. You can also frequently get more money out of the sale if you have flexible financing options.
Peter Vekselman has been successfully investing in real estate since 1996. For more information please visit
www.CoachingByPeter.com
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