There are many ways to fail when it comes to investing in real estate. The first one is to just take no action. Sit back and let everyone else find the good deals. Dream about the day you find a property for thousands of dollars below market value. You can only fail in real estate if you do nothing.
Some simple mistakes many new investors make is to complicate things. The formula for real estate investing is very simple. Buy low and sell high. This is the formula used for hundreds of years to make men wealthy. It worked before and it will work again and again and again. If you find a property you can purchase which is below the market value, and you can sell it for market value or above, then you have made a profit. It is that simple. You just need to understand the market.
There are many bankruptcies on the market now. Finding one which can yield a profit is not hard. You need to understand certain things. The first one is what laws govern your purchase of real estate. Each state is different when it comes to investing. Sometimes new investors think that what is acceptable in California can also be done in New York. This is not always the case. Determine what you must do to acquire a bankrupt property. Real estate courses at the local community college can educate you on the laws and regulations. It is a good idea, especially if you are a beginner investor to take a real estate course. You will not only benefit from the knowledge, it can save you thousands of dollars in the end. You will know how to put deals together which are legally binding.
Forgetting to analyze the market can also lead to failure when it comes to real estate investment. You will want to know which neighborhoods are growing and which ones are on the decline. You do not want to invest in an area where property values are falling. This can only lead to trouble. Just because today’s market says the house is worth X amount of money, does not mean it will sell for that price. This is especially true in a failing market. Choose areas you know are growing. Check local planning boards to become familiar with new plans or new zoning. This is usually a good indication of where to find growing areas. It may be a year or two before the area reaches its prime, but this is good for you. You can find properties which are available now that you can turn a profit on when it comes time to sell.
One of the most common ways to fail when it comes to investing in real estate is putting too much money on rehab. There is a phrase which says, “ if it ain’t broke don’t fix it”. This is especially true when it comes to investing in real estate. Put only what you need to in the property to sell it. Do not spend thousands updating the kitchen or gutting the upstairs. The new buyer can do these remodeling jobs. Make sure the properties have great curb appeal, are being offered at a reasonable price, and are clean and well maintained. This is what a buyer is looking for. You can find one repair could lead to hundreds of dollars in other repairs when you get started. Have the property inspected to determine what exactly needs done to get the house ready for market. Other than that, do not invest any more than you have to. There are times when this rule does change, but not very often. If you know your market and understand what the buyers are looking for you will know what to do in these cases. The less money you put out-of-pocket the more money you will make when it comes time for the sale.
Some careful planning and common sense can make investing in real estate a very profitable business venture.