Tag Archive | "real estate investment"

Setting a Renovation Budget for Your Real Estate Investment

When buying property to renovate and sell, if your goal is to make a profit you have to take into account what kind of profit you want to make. i.e. What will be the return on your investment (ROI).

Buying a house cheap, and doing the minimum necessary to renovate it, may well make you some money on the deal because you have taken a house in disrepair and sold it in a liveable condition.  However, there is always the danger that you will find more wrong with the house the longer you work on it and the more you have to dig into areas not easily seen on first inspection.

You have to have a strategy when it comes to renovating a house, because without being firm and decisive you will allow far too much slippage when making decisions, and it is this slippage that can turn a nice profit into a mediocre one or worst case, a loss. Instead of taking an overly flexible strategy, you need to have a plan when deciding what work you will do. Sticking to your strategy – up to a certain point, anyway – is important because if you fail to stick to your plan, costly overruns can eat into potential profits.

Equally, though, you need to be ready to spend money to make money. Being conservative and unbending as regards your budget could see you not reaching a decent price on the sale of a renovated property. Budget an amount necessary to make the house compatible or slightly better than similar homes in the neighborhood. This way your house will be more attractive to potential buyers.

Have a budget you would like to stay within, and a slightly higher “contingency budget” which allows for potential mishaps along the way – by doing this you will increase potential profit and get a good ROI.

Posted in Renovating PropertyComments (0)

Is Real Estate a Good Investment?

You have probably heard it before, investing in real-estate is among the best investments you could make. Usually, the value of real estate properties increases. It may sound easy, but beginners would usually fin out that it is not that easy. It would require knowledge which could be achieved through research, planning and hard work. There are common mistakes in real-estate investing which could lead to serious pitfalls.

Before you proceed in investing your hard-earned money in real-estate, you would have to consider several things first. For example, you would have to identify what kind of money you want to earn, it could be lump sum where you could have to venture into wholesaling and flipping. Flipping means you would have to buy properties and hold them until you could sell the properties for profits.

Before you buy any kind of investment, you would have to be familiar with the laws covering the property. Different states would usually have different laws covering property acquisition. There are legal procedures that you would have to undergo or complete to fully claim your right to the property.

Your investment could also provide passive income which would require you to look into houses or properties that could house a number of families. These houses could be rented out. However, this kind of investment may have drawbacks since the property may end up with bad tenant or without any tenant at all. If directly managing the homes or rental units is not your cup of tea, then you could try getting a real estate investment group. They would be building or managing the property for you in exchange of a percentage of tenants’ monthly payments.

If it is your first time to venture in real-estate investing, then you would have to be aware of common beginner’s mistakes. One common mistake is speculation. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. As mentioned earlier, real-estate investing requires research. Aside from that, you would also have to be prepared for the worst. If nobody buys the property, then you would have to think of other methods on how you could generate income from it. You could lease it, rent it and think about other exit strategies.

Another common mistake is getting emotions involved in their first investment. Emotions may cause problems when making business decisions like prospect buyers being cut-off even though they are offering the best deal. Before you start looking for properties, make sure that the real estate team is ready.

Most people think that they could start investing on their own, big mistake. A good real-estate team and mentor would surely help you move quickly towards your goal. Who do you need in your team? You would need a real-estate agent, loan officer, tax adviser, and even a lawyer.

When property hunting, keep two things in mind: location and value. There are newly-developing places where real estate investing could provide you with greater financial returns in the future. Usually, you would find a great property in a great location, it may need some fixes but it could be addressed inexpensively. You may also want to think twice about buying a good property or residential house when it is located in areas with high foreclosures rates. Also, think about buying a property close to your home. This way you could focus and check on the property without being hassled of travelling for hours.

Real estate investing would not make you a rich man overnight. It would require you hard work and good marketing strategies. You would have to be mentally, emotionally and psychologically prepared for it. But when strummed in the right strings, it could definitely provide you financial stability.

Posted in Buying PropertyComments (0)

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