Real Estate Investing
Real estate investing came be one of the safest types of investments, but it isn’t just buy, sell, and profit. To ensure a property or rental will turn a profit, you need to follow some important guidelines
Most of these tips you have probably heard of before, but some of these tips might be new to you, and help give you a better understanding of real estate investing and house flipping.
1. Picking an agent with good experience - Before you sell your property, drive around your area and see what else is for sale. When looking at the for sale signs, be sure to take note of the name of the agent that is selling the property.
Whatever real estate agent’s name you see the most, that is provably your best bet as that agent has the most experience with selling property in your location, which means he/she can price and market it properly.
You can also search all of the real estate listings in your area online, or in a guide, and see the agent’s name who is listing in that area, or find properties just like yours in different areas and see which agent they were listed with.
2. Placing low offers properly – When making your first offer, which will most likely be lower than the sellers asking price, you need to make it clear that it is nothing personal and that you need it to be that price to make it work out for you.
Also, to make your offer see more appropriate, make a list of repairs you would like made. If you have an option, have your real estate agent present your lower offer without you being there, because sellers sometimes do not like to hear criticisms of their property.
3. Find extra opportunities – Extra opportunities exist in a lot of properties, that can up the value, and other investors might not even notice them. For example, you could turn an attic into an extra bedroom, or even finish the basement so it is livable space. Another great extra opportunity is lot size. Sometimes you can split your lot into two, and either build another property on the other lot, or just sell it while still keeping the original property.
4. Rental cash flow problems – It is tempting to buy rental houses, duplexes, etc, and think that you are making a good investment. But these properties pay according to the personal value, which means they can be priced beyond where they can produce cash flow.
Apartment buildings though are priced according to net income, so when you cannot make a profit with small rental properties like duplexes, you might want to think bigger.
5. Find motivated sellers – When searching for a property to buy, look for the words like “Must sell” or “Will consider all offers”, or something along those lines. These sellers are known as motivated sellers, and they can have some really low asking prices.
6. Property value appreciation – Many real estate investors think that property value rises no matter what, because of inflation, but time and time again the market has shown that not to be true.
If you rely on making a profit from the value rising, you are speculating and not investing. On top of that, the fact that transaction costs can total 10% of the sale price, you would have to have a big increase in the value just to make your money back.
7. Research your property and create a budget – This is perhaps the most important thing you can do, since it will give you an idea of how much money you have to put into it. If you have to put more than the house will potentially be worth when you are done, then it is a poor investment and you need to either come up with a different budget list that will work, or keep looking for another property.
Contact Darin Parker if you are looking for a Bloomington Illinois real estate agent.
Darin Parker sells and buys real estate property in the Bloomington-Normal Illinois area. Visit his website at http://www.darinparker.net
