Flipping real estate is one of the few reliable investments left now that stocks have become so schizophrenic, 401ks are becoming less and less of an option, and even social security is drying up. Yes, the housing market has its ups and downs, but a home is always worth something, land is always worth something, and you an use the slow seasons to invest while you use the hot seasons to sell. Now here are the basics of flipping homes for profit.
Buy Property Cheap
This one should be obvious, but so many people neglect it. If you’re buying a million dollar property in a gated community, you’re probably not going to make much of a profit. You might be able to fix it up a bit and turn, say, five percent on the purchase price, but you better keep the repair costs down. Basically, the lower you start, the less you spend up front, the bigger your profit will be. It’s easy to turn a dirt cheap house into a modestly priced home worth two, three times what you spent on it, but doing this with a home that’s already on the top of the market? Forget it. Buy cheap.
Sell it High
Another obvious step that many new investors just plain neglect! It’s ridiculous that so many real estate investors ignore these two crucial steps, as they are the basic concept of business: BUY LOW, SELL HIGH. You want to make as much profit as possible on each property you sell. This means that you can’t be content to, say, buy homes when the market is weak and sell when it’s strong. That’s profit, but it’s marginal. What you want to do is buy those beat up places you could have for a song, and then turn them into something that will sell well in ANY market. Take something of low value and turn it into something of high value. This is the core of smart business.
Control Your Budget
The best way to go broke is to buy a beat up old house, and then spend half a million bringing in professional crews to rebuild the thing from the ground up. You’ll be lucky to break even. If this is your first property investment, try this: Buy the home and live in it for a year while you and your buddies fix it up. Your friends can work for “friend rates” or for a small but fair percentage of the profit. Control your budget and don’t go over, and you can turn a very small investment into a very large profit.
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