To make the most money possible in real estate, the standard philosophy is to “buy low, sell high”. Most people try to do this, and many do not succeed because it’s hard to do. When trying to get the highest return possible, keep your costs down, and do everything possible to draw in the highest bidders.
Once you own the property, do as much of the repair work yourself, as long as it is of a professional level. Shoddy work and inferior materials will cost more to correct later. With difficult projects, hire a trained professional from a small scale operation. Large contractors with several employees have to factor their large overhead into their prices.
When looking to maximize your profits, try to save money with your lender. Look around for cheaper loans with the less popular lenders. The large banks and financing companies usually have high fees and rates. Don’t accept overpriced fees. For example, your lender is charging $75 to deliver a few papers a short distance, ask for it to be reduced.
By educating yourself on the legal and accounting aspects of real estate transactions, you can save yourself thousands of dollars. If you learn the basics of these two areas you will know when to ask for a professional’s help.
When negotiating, be firm but flexible. Attempt to find a win-win situation where both you and the other party walk away from the table happy. Be clear on what you want, and what you can be flexible on. If the other party walks away angry and feeling cheated, they might try to sabotage your attempt to make a profit.
If you are selling your property, it’s important to also shop around and negotiate for the best prices on high priced items like closing costs.
“Staging” is setting the scene by making your property look its best. You will get the highest price for a property that has been properly prepared.
Actively market your property and you’ll get the largest pool of potential buyers possible. It is a benefit to the seller if there are several interested parties in your property.
Buy and Sell at the Right Time
Timing is important in all investments, but unlike other investments – bonds, stocks, and mutual funds to name a few – there are two characteristics specific to real estate investing.
1. Real estate transactions take a long time.
2. Each piece of real estate is unique.
In order to buy or sell property, it takes a long time, and while the transaction is taking place, the market is constantly changing. This makes timing the purchase or sale of real estate tricky. When you are investing in real estate, you are trying to sell high and then jump back into the market by buying low. Timing the market in such a way is a challenge.
Look for a property that is a “fixer-upper” to get a good deal. If you have an aptitude for home repair or you know an inexpensive worker, you can increase the value of a home by over 10%. Search for foreclosure auctions and Notice of Default alerts in the area newspapers and online. Find a good deal on the property by anticipating positive change in depressed areas. Up-and-coming neighborhoods, in areas where people have been leaving, tend to have lower prices. Find areas where the government is involved in development efforts.
The key to employing any of these strategies is access to capital. This doesn’t mean having an account with a large sum of money in it. Instead, you need to have access to money. By maintaining a high credit score, nurturing an efficient relationship with your lender for quick approval for financing, and having access to liquid assets, you’ll be prepared to jump when the right deal comes along.
Even in a slow market, the chance to make a profit investing in real estate is still likely. To do this, however, you’ll need to do your homework, have a long-term outlook, and be able to walk away from any deal.