Find Your Investment Property and Profit from Your Purchase
Typically you will not start with a huge profit but it will definitely depend on how you successfully follow the right investment strategies. The profits you make, however, can be made or destroyed at the time of real estate purchase What is “profit when you buy?”
Profit, when you buy, means you must purchase a property at a price that ensures you make your desired profits based upon your ability to execute your exit strategy. In other words, you need to buy smart. If you vastly overpay for a property, no amount of wishing, hoping, or improvement is going to make your investment worthwhile.
Example
A home is listed at $145,000, and recent comparable sales show that similar homes have sold for between $140,000 and $170,000. However, the home needs about $25,000 worth of work to be in nice condition. Therefore, if you pay $145,000 for it and put in $25,000, you’ll be at $170,000, and that doesn’t count all the closing costs, holding costs, selling costs, unforeseen overages, or other fees that you’ll have to pay. You will be underwater (owe more than it’s worth) on this property no matter how much work you do to it. However, if similar homes were valued at $225,000, you would find that you had, indeed, made your profit when you bought.
The same principle applies to rental investment properties. If all your monthly expenses (including taxes and insurance) on a rental home were $1200 per month and the average rent received each month was $1100 per month, you would be losing money each month. However, if average rents were $2,000 per month and your total expenses were just $1100, you would be profitable from the day you bought it.
When you locate real estate property, make sure you profit when you purchase a property based on what it’s worth today, not what it might be worth someday. If an investment makes no sense without appreciation, don’t invest in it. This is known as “speculating,” and, while it may be profitable for some, it can be a risky venture for both inexperienced and experienced investors alike.
Now that you understand why getting a great deal is important we focus on helping you implement the right strategies to help you make informed decisions. Real estate is an exciting field with a lot of different niches and strategies, so it is easy to get distracted by the next big thing or trend. Having a clearly defined selection criterion can help you stay focused, avoid “analysis paralysis,” and keep you on track to buy a great investment property.
